A proposed Central Otago irrigation scheme faces a major
setback, with a request by Tarras Water for $3.5 million from
the Otago Regional Council set to be turned down.
At the same time, an agreement by the Central Otago District
Council to guarantee a loan for 20% of the scheme's cost is
dependent on the regional council's support.
A hearing panel of regional councillors, including council
chairman Stephen Woodhead, has recommended the council not
proceed with a change to its long-term plan to allow
investing in the scheme.
Councillors will consider the recommendation at a meeting in
Dunedin tomorrow. Tarras Water Ltd chairman Peter Jolly, when
contacted yesterday, declined to comment on the
''We haven't had a chance to digest the report yet, or to
discuss it as a board,'' he said.
The scheme, to irrigate 6000ha from the Clutha River, has
generated discussion and differing views among Tarras
farmers. It is seen by backers as, in part, a replacement for
the Lindis irrigation scheme which expires in 2021.
The regional council's hearing panel made its recommendation
after considering 68 submissions, with 12 supporting the
council's investment and 55 opposed. Opposers were concerned
about the council's lack of mandate to invest in the scheme,
the risks, the possibility of a conflict of interest, the
setting of a precedent and a benefit to a private enterprise
and to a limited number of people.
Supporters believed council support would boost the scheme's
viability and bring significant environmental and economic
benefits. The council said it had to be mindful of risks and
its financial strategy and prudent management. A legal
opinion on the effects of recent changes to the Local
Government Act showed the council's long-term plan could be
amended. The investment was within the purpose of the Act
because it supported good quality infrastructure.
The report said the council's investment policy stated
investment in irrigation could only be considered if other
loan and equity funding had been ''diligently'' explored.
However, Tarras Water had not explored any other avenue for
the uptake in dry shares, it said.
Further risks had been identified as Tarras Water did not
have a guaranteed-price construction contract and uncertainty
remained around the cost of fixed charges the council would
have to pay.
Tarras Water was still negotiating with energy companies.
Tarras Water had also provided the council with revised
estimates. These showed the scheme had been reduced from
about 6230ha to 5999ha, meaning the council's investment
would drop to $3.36 million rather than $3.5 million and the
fixed charges could be about $2.3 million rather than the
proposed $2.1 million.