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A feasibility study to prove whether a new irrigation scheme in Waimate covering up to 40,000ha is viable can now start, after the Ministry of Primary Industries agreed to give $7 million over the next two years.
Initially, along with money from shareholders and $3.8 million from Meridian Energy, some funds will be used to investigate the feasibility and viability of the Hunter Downs irrigation scheme.
If that hurdle is cleared at the end of the year, shareholders will be asked for a further input which, along with the money from Meridian and the ministry, will go towards detailed planning, costing and calling of tenders, with a projected work start at the end of 2016 and water available from the start of 2018.
Hunter Downs Irrigation Ltd chairman Andrew Fraser yesterday welcomed government funding for a scheme which, he said, had potential ''big benefits for the whole community''.
He told the Otago Daily Times the scheme had been planned for more than eight years, but advanced since a two-company structure was established last year to own the scheme and oversee its development.
Last month it was confirmed financial support from shareholders and Waimate and Timaru District Councils met the local funding threshold.
That support met ministry requirements for finalising the company's application for $7.044 million from the Government's Irrigation Acceleration Fund.
The company had issued 27,390 shares to 151 shareholders, mostly within the potential scheme area. They paid $25 a share as instalment one of a $200-per-share total. That raised more than $680,000 now and potentially $5.4 million once all instalments were received.
The first instalment of $25 per share is what the company needed for the next phase of work.
Primary Industries Minister Nathan Guy said the $7 million over two years was to co-fund technical investigations and design work to determine if the scheme was viable.
''If the scheme proves to be viable, it has the potential to increase income in the Waimate and Timaru districts by $830 million a year and create 1800 jobs.
"It will provide long-term security for agriculture in these districts and provide landowners with greater confidence around production and investment decisions,'' he said.
The irrigation infrastructure would also benefit a nationally significant wetland, Wainono Lagoon, with extra flows to improve water quality.
The scheme already had resource consent to take about 20cumecs of water from the Waitaki River to irrigate up to 40,000ha in the Waimate and south Timaru districts, but still needs land use consents from the Waimate and Timaru District Councils.
In 2009, the scheme was estimated to cost $200 million, but a more up-to-date figure will be determined in the studies to come.