Businesses across Sydney, the Blue Mountains and the Illawarra are being urged to apply for permits to exempt them from severe water restrictions before fines apply for regulation breaches.
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Most of NSW is in drought or drought-affected, and large swathes of the state are experiencing "intense" drought, the Department of Primary Industries says.
Sydney Water says catchment dams in greater Sydney are experiencing some of the lowest inflows since before 1940.
Dam levels on Thursday are at 42.1 per cent, down 0.4 per cent in the past week.
Level-two water restrictions came into force in December across Sydney, the Illawarra and the Blue Mountains.
Sydney Water on Thursday urged businesses across the three regions to apply for a water exemption permit if required.
Businesses which cannot adhere to level-two restrictions due to commercial water usage must apply for a permit before Friday.
"We know that there are thousands of businesses across greater Sydney that rely on the use of drinking water as part of their operations," Sydney Water's executive drought lead Catherine Port said in a statement.
Only businesses which use drinking water need to apply for a permit as recycled water, greywater, rainwater and bore water are excluded.
Since level-two restrictions were announced more than 8000 exemptions have been granted, Sydney Water said. Thousands more are currently being processed.
Fines will apply from Saturday for businesses which do not use water according to restrictions or under permit conditions.
Under level-two restrictions, residents are required to use a bucket or can when watering gardens or washing cars before 10am and after 4pm.
Those in greater Sydney have also been asked to take four-minute showers, while the refilling of pools and spas will be limited to 15 minutes a day.
Australian Associated Press
