Ruataniwha preferred private investor close to selection

A preferred private sector investor in the Ruataniwha irrigation scheme is close to selection, says its primary backer, the Hawke's Bay Regional Investment Co (HBRIC).

HBRIC says a preferred private investor is about to start due diligence on the $275 million project, which will create a 93 million cubic metre reservoir to store water in the upper Makaroro river to improve river flows for agricultural use in the Tukituki River catchment.

Infratil-controlled Trustpower pulled the plug on its involvement in early 2014, followed by its other private backer, South Island iwi Ngai Tahu's investment arm, before a board of inquiry delayed resource consents for the dam while new environmental quality standards were set.

If backed by private investors, the project is likely to be eligible for funding from Crown Irrigation, a government agency holding a revolving fund to accelerate irrigation developments.

However, government support is not available for seed funding.

Substantial backing from private or local government sources is seen as required before individual farmers and horticulturists will commit their capital to such large infrastructure projects as irrigation schemes. The Hawkes Bay Regional Council has indicated it will commit to the scheme.

Close to 42 million cubic metres of water has to be contracted, "or close to it", to get the scheme off the ground.

The water uptake work stream is on hold until there is more certainty around the investor mix. HBRIC says the process of selecting a preferred investor "involves extensive due diligence processes with multiple parties with a view to delivering the best value for money solution.

"The plan is to enter into a memorandum of understanding with a preferred investor soon to enable it to complete final due diligence alongside HBRIC, Crown Irrigation Investments and banks", enabling HBRIC to commence a review with its advisers, Deloitte, says HBRIC chief executive Andrew Newman.

The announcement comes less than a week after a High Court decision rejected a bid by the Royal New Zealand Forest & Bird ProtectionSociety to overturn a land swap deal between HBRIC and the Department of Conservation that will allow an area of conservation value to be flooded in exchange for a larger area of land with conservation value.

(BusinessDesk)