Mr Gutwein revealed on Friday the Liberals were “actively considering” a move to purchase the water regulator, in a bid to improve the state’s infrastructure.

But councils statewide stand to lose millions in much-needed revenue if the takeover goes ahead.

TasWater is currently owned by the state’s 29 councils, after three water and sewerage corporations merged in 2013.

“The revenue needs to be injected into ensuring the water and sewerage services are brought up to an appropriate standard at the earliest opportunity,” Mr Gutwein said.

He said he wanted the money generated from TasWater to leave council’s “in a relatively solid position” if a takeover did occur.

The treasurer deflected suggestions the takeover was a ploy to force councils into amalgamation and said he wasn’t interested in “having a fight with local government”.

“This is about ensuring that we fix a problem,” he said.

“Obviously the considerations that we have to have front and centre are the impact on councils.

“Obviously the returns that councils get from TasWater are important and we need to factor those into our thinking.”

Mr Gutwein said TasWater chief owner representative and Northern Midlands mayor David Downie had indicated to him that his belief was that councils couldn’t do anymore to fix the state’s water woes.

Mr Gutwein said specifics of the proposed takeover were still being hashed out and he would not be drawn about how soon a potential deal could go ahead.

At least one mayor has queried the proposal, with Meander Valley mayor Craig Perkins expressing that some of his counterparts were “pretty annoyed” at the way the move had eventuated.