A Waitaki District Council loan of up to $3 million is the last step of funding the Kurow-Duntroon Irrigation Co needs to modernise its scheme.
This week, the roughly $45 million project, designed to cover 5000ha for more than 60 shareholders, was approved by the council, and councillors instructed finance and corporate development group manager Paul Hope to settle the conditions of the debt facility.
When the Government began winding down public subsidies for large-scale irrigation projects earlier this year, the Kurow-Duntroon Irrigation Co did not lose its funding because Crown Irrigation Investments Ltd had signed a construction funding term sheet with the North Otago scheme. Mr Hope noted in his report to the council that Crown Irrigation Investments Ltd, as principal funder, had done "significant research into the viability of the upgrade".
The request from the company was to meet 50% of the company’s funding shortfall, which came about as a result of the design and construction agreement the company reached with its chosen contractor.
The scheme serves a mix of dairy, sheep and beef farmers, viticulture and other sectors and the upgrade will include replacing about 44km of existing ageing open canal with 37km of piped irrigation infrastructure. Cr Bill Kingan said he was pleased the company was able to make the most of the Crown investment as the entire district was "based on and grown on" primary industries.
Cr Guy Percival said while he had initially been concerned about the council putting itself at financial risk with "quite extensive" irrigation loans, he believed the council’s financial team was competent and the loan would provide an economic benefit. Also, the lower Ahuriri had been "neglected over the years by the council", he said.
Cr Melanie Tavendale said she believed the council’s money would earn more as a loan to the company rather than "sitting in the bank", but for her a "big plus" was the environmental improvements the planned upgrade was expected to bring. The company’s chairman, Geoff Keeling, said the upgrade would also mean some using the scheme would need transfer to new consents.
"A lot of the growth in the scheme, from the existing 2000ha to the initial 4000ha ... is taken up by some existing shareholders, either watering a bit of extra land on their existing holdings or shareholders replacing mining rights out of tributaries."
He said the big environmental gainwas with the number of people who irrigated from the tributaries on the south bank of the [Waitaki] river.
"Those creeks have no environmental minimum flows on them, so people can take whenever they like or whenever the water is there.
"If the bulk of that irrigation comes off these tributaries, it will negate to a certain degree those fights ... later on about what is a suitable environmental flow to those rivers, because the irrigation gets removed.
"We had our consents sorted out over the previous five to 10 years — we have very modern environmental standards ... It’s also transferring those people from consents that have few rules around them to ours that have the complete modern suite of consent conditions."
