Experts say the NT’s new water charges are too low. 

Northern Territory fracking companies will soon be required to pay for groundwater use, a change from previous decades where water was free for major industries.

The new water legislation introduces an annual flat fee of $3,000 for groundwater extraction licences used for “petroleum activity that includes hydraulic fracturing”, or fracking. 

However, water economists have criticised the fee, saying that it is far too cheap and will leave taxpayers out of pocket.

According to Jeff Connor, a water economics professor at the University of South Australia, the charge is so cheap that it is essentially “gifting" a public asset to private companies. 

Erin O'Donnell, a senior lecturer and water policy specialist at the University of Melbourne, added that the flat fee could incentivise companies to use more water than they need.

The move is the latest step by the NT Government to make way for a fracking industry in the Beetaloo Basin, which is about 500 kilometres south-east of Darwin. 

While Australia typically charges for water to pay for regulation of water use, the fee in NT is cheaper compared to charges applied elsewhere. 

Additionally, the Pepper Inquiry, which the NT government accepted in full when it lifted its ban on fracking in 2018, recommended that gas companies should pay for water needed for drilling and fracking wells in the Beetaloo Basin. 

The authors of the inquiry's final report wrote that shale gas companies should “acquire and pay for water extraction licences for their activities”. 

Quentin Grafton, UNESCO's chair in water economics and trans-boundary water governance, said the NT government's groundwater charge ought to at least cover the costs of monitoring water compliance at fracking sites. 

A spokesperson for the NT's Department of Environment, Parks and Water Security (DEPWS) said the $3,000 flat fee was an interim measure. 

David Slama, the NT director of the Australian Petroleum Production and Exploration Association (APPEA), has welcomed the NT government's progress implementing the recommendations of the Pepper Inquiry.