13 Apr 2016

Dam's cost jumps to more than $900m

4:45 pm on 13 April 2016

The cost of the Ruataniwha water storage project in Hawke's Bay has jumped 50 percent and is approaching the billion dollar mark.

The new figures are in a report commissioned by the dam developer, the Hawke's Bay Regional Council, to review the regional economic impacts of the irrigation scheme.

The Butcher report predicts economic activity around the dam will create 3500 jobs and contribute $380 million to Hawke's Bay's GDP.

The proposed Ruataniwha Dam would be built on this site in Hawke's Bay.

The proposed Ruataniwha Dam would be built on this site in Hawke's Bay. Photo: RNZ / Peter Fowler

The same report, to be considered by the council this morning, shows the total cost of the dam has jumped by $300m to over $900m.

The construction cost of the dam alone has jumped by nearly $100m to $333m.

The Butcher report says this is because a new irrigation zone has been added so more pipes and pumps are needed to get the water into the zone.

Of that $333m, $80m will come from Hawke's Bay ratepayers and the rest will be met by Crown Irrigation Investments and ACC, which RNZ News understands is the preferred investor.

Sixteen million has already been spent on the project, but the biggest cost increase is the amount farmers are expected to invest - that has jumped $200m to $556m.

The construction cost of the dam only gets water to the farm gate and farmers are expected to invest or borrow to install additional pipes and irrigators.

Ruataniwha Dam

The area now, and an impression of what it would look like with a dam. Photo: SUPPLIED / Isthmus Group

The regional council's investment company HBRIC said the farmers' cost had increased because - according to the report - with low returns for dairying, a large increase in water users wanting to grow apples and grapes was expected.

The farmers' land would have a higher profitability than other land uses and in turn a higher economic return to the region, HBRIC said.

However, it was not clear how many central Hawke's Bay farmers would suddenly want to convert to apple or grape growing.

Hawke's Bay regional councillor Tom Belford said the conditions on the Ruataniwha plains were not suited for growing apples, so the major platform on which the financial benefits were based was entirely ungrounded.

And Peter Beaven, a regional councillor and former chief executive of Pipfruit New Zealand, also had doubts. He has extensive contacts in the horticulture industry, and told Nine to Noon he could not find anyone who intended to plant in the area in the next 10 years.

HBRIC chief executive Andrew Newman said apples and grapes were just examples of the types of crops that could be grown.

"Now, whether it's absolutely viticulture, or it's absolutely pipfruit... It may be less than that number, it may be more than that number or it may be entirely different intensive horticultural crops."

Mr Newman said ultimately the farmers would decide what the water was used for.

Deadline on Monday

Regional councillor Rex Graham, a former orchardist, meanwhile, said central Hawke's Bay farmers would not buy enough water to make the project viable.

HBRIC has also struggled to get the minimum number of farmers to buy enough water to make construction viable.

It has set a deadline for Monday for farmers to buy the water or the dam won't go ahead.

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