Saint John is delaying the construction of a water treatment system until 2014. (City of Saint John)

The construction of Saint John’s new $162-million water treatment system is likely to be delayed for two years as the city attempts to secure funds for the project.

The city engineer in charge of the massive infrastructure project says much of the next year will be taken up with the process of applying for and securing funding from the federal and provincial governments. The city may also seek private sector funding for the project.

The city must also investigate whether it can use well water for all or part of the system.

Dean Price, a municipal engineer, said the construction cannot start on the infrastructure project until late 2013, at the earliest. But Price said it will likely take longer than that to finalize the water treatment system project.

Early last year, Paul Groody, the city's former commissioner of municipal operations, told Saint John city councillors the four-year project had to start in 2012 or costs would go up by $8.5 million for every year it is delayed.

"Every year it's delayed it will cost you more," Groody said at the time.

"If you delay this four-year program one year, it will cost you an extra $8.5 million. If you delay it four years, it will cost you an extra $37 million."

While the inflation rate has been lower than the five per cent Groody predicted originally, it now appears likely the project cannot be started before 2014.

One of the delays in the project is to allow the city to study a new well water proposal. Saint John is looking at whether it can convert its drinking water system over to wells instead of lakes.

The city has said it hopes to save as much as $60 million on the cost of water treatment facilities by making the switch.

In October, council approved a plan to spend $95,000 so a consulting firm could begin drilling test wells this fall near the Westgate Park subdivision.

Saint John is also facing a financial crunch.

The city's pension plan has an estimated deficit of $193 million.

The tight finances led to millions of dollars of cuts in the 2012 budget and city councillors held pre-budget meetings across the city in the last few months.

Saint John’s city officials are also warning changes to the unconditional grant program could cost the cash-strapped city almost $1 million.