Irrigation backing sought

Irrigation is said to have brought 274 new jobs to North Otago. Photo by David Bruce.
Irrigation is said to have brought 274 new jobs to North Otago. Photo by David Bruce.
A further $9.5 million could be invested by the Waitaki District Council in the North Otago Irrigation Company and its loan extended another eight years, taking the council's total investment to $22 million.

The company is about to embark on selling shares in a second stage of 10,000ha, in addition to the 10,000ha it already irrigates in stage one.

In 2006, the council lent the company $10 million for 10 years when the scheme was being built to provide infrastructure needed for stage two.

Now the company has approached the council asking it to extend the $12.5 million (including accrued interest) owing to June 30, 2022, and invest a further $9.5 million.

While the first loan continues to cause some controversy, at its meeting on Wednesday the council will look at whether to approve ''in principle'' investing more and extending the term.

That would be the first step leading to due diligence and renegotiation of loan terms to strengthen the council's security, including quarterly interest payments from January 1, 2015, through to the end of the loan.

At present, interest is accrued on the council's loan, then paid along with capital as shares are sold.

A final decision on whether to proceed with the loan would still need to be made by the council, probably in September, and depend on pledges for shares in stage two.

Money for the original loan, and its increase, comes from sources such as accrued depreciation and reserves, not from rates.

Normally, that would be invested in a bank, but investing in the irrigation scheme benefits North Otago directly and also yields a slightly higher interest rate.

A recent social and economic impact study on the effect of stage one on North Otago's economy showed there had been a $48 million increase in gross domestic product, 274 new jobs, more families and a younger demographic in the survey area.

Council chief financial officer Paul Hope said it was clear from the study and the work being done by the irrigation company that investment in irrigation was stimulating economic growth and protecting the farming community from the effects of drought.

''The choice is whether the council wishes to further invest in the development of the scheme,'' he said.

Company chief executive Robyn Wells said access to water had a significant benefit to the Waitaki district over the past eight years.

Stage two of the scheme was consistent with the original goals agreed by the council and company.

''We are confident an extension of council's current loan will allow a higher uptake to the scheme and bring further, long term sustained benefits to the community,'' she said.

david.bruce@odt.co.nz

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