MidCoast Council is counting the cost after 1.7 kilometres of pipeline for the proposed temporary desalination plant at Nabiac was vandalised during the weekend.
According to a spokesperson, the repair bill is unknown at this stage, and council is weighing up its options on whether to repair or replace the damaged pipe.
The damage, which occurred between Saturday and Sunday, included a number of small holes drilled into a long section of the specially manufactured pipeline.
"While council will be working through this issue with the contractor and insurers, it will result in a delay to the vital project," the spokesperson said.
"This will place pressure on the delivering of MidCoast Council's drought response plan and the security of the water supply for the entire Manning and Great Lakes area."
NSW Police is undertaking an investigation into the matter and council won't comment further.
The propose plant will be located in the Wallamba River near Darawank.
Anyone with information about this incident is urged to contact Crime Stoppers: 1800 333 000 or https://nsw.crimestoppers.com.au.
Information is treated in strict confidence.
The public is reminded not to report crime via NSW Police social media pages.