18 Dec 2014

Farmer contracts not taxing water-take

2:50 pm on 18 December 2014

Contracts signed so far to take water from Hawke's Bay's Ruataniwha dam and irrigation project added up to only about 13 percent of the commitment needed to make the scheme commercially feasible.

But the company running the project says farmers representing more than half of the minimum water-take required have made the decision to join the scheme and have asked for contracts.

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 figures are in a report that the Hawke's Bay Regional Council's investment company presented to the council today.

The company has until the end of March next year to decide whether the dam and irrigation project in the Tukituki River catchment will have enough backing to proceed. That includes having enough farmers signed up to take a minimum of 40 million cubic metres of water a year.

Chief executive Andrew Newman confirms that contracts for just 5.4 million cubic metres have been signed so far, but the describes progress as reasonable.

"That's the back of the end of a quite detailed process once it's a contersigned contract. Probably of more relevance at this point in the process is that we have around about 200 properties, some jointly owned by the same entity, we're in a process with and we've identified what we think is high probability water of now a little bit in excess of 40 million cubic metre.

"We think we need to drive that number up further, but critically within that group of properties we expect 25 million cubic metres at Christmas to be into the contracting process.

What that says is that farmers have been through a diligence exercise, looked at their farming systems, looked at the capital costs, looked at the soil types, climate data, water requirements, all those sorts of issues and asked us for a contract."

Mr Newman says the company is also talking to potential investors, but concedes that a recent High Court ruling on the scheme has introduced a further element of uncertainty.

The court ordered the Board of Inquiry that approved the dam and district plan changes associated with the irrigation scheme to reconsider part of its final decision relating to nitrogen leaching limits for farms in the Tukituki catchment.

"From our point of view, we were pleased to get the decision before Christmas because we were anticipating it might well be February, and we note that, the ruling or at least our interpretation of the ruling is that in reconsidering a couple of points, the High Court ruling hasn't been prescriptive as to exactly what should happen there," he said.

"So I guess it's a task for us to work through and really come up with a practical, workable solution that meets the environmental needs of the catchment and ensures that the scheme can live with all of that in a regulatory and commercial sense , so we are focused on making sure we get through that hurdle."

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