The company with plans for Canterbury's biggest irrigation project has signed a preliminary agreement with the Synlait dairy company to build a smaller scheme on the north bank of the Rakaia river.
Central Plains is seeking consents to take water from the Rakaia and Waimakariri Rivers as part of a larger proposal, to irrigate up to 60,000 hectares of farmland.
The smaller project will include a scheme capable of irrigating 4000 hectares at Te Pirita, between the Rakaia and Selwyn rivers.
Under the agreement, Synlait will purchase shares in Central Plains and transfer its consents to use water from the Rakaia River, into a new subsidiary company.
Synlait chief executive John Penno, says work will start on the smaller irrigation project regardless of whether the larger one goes ahead.
Both companies say by removing legal impediments that previously existed between them and incorporating the resource consents for Synlait, it should be possible to build the scheme within the next two years.