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Dr Andrew Pearce
introduced the item, stating that he believes that HRIC will have the support
of other investors to achieve financial close based on the level of water
uptake achieved to date.
Mr Andrew
Newman provided the water uptake amounts achieved through signed water user
agreements to date, being 196 agreement for 42.8 M m3
with a further 3 M m3 in advanced negotiations and
2.7 M m3 call options for agreements adding up to
48.2 M m3 today, which will realistically result in
50 M m3 by the end of June.
Mr Newman
noted that 8.4 million m3 of deep water is included in the
contracted water, which directly benefits the environment by leaving the
water in the aquifer, and represents about 45% of the total water taken in
the Ruataniwha Basin in the 2012-13 drought year.
Mr Newman
introduced Mr Duncan McLeod, who advised that if those 196 contracted
properties chose to irrigate all of the area they could, at the volume per
hectare that science suggests they should, this would equate to 85% of the total
volume of water available from the scheme. He then provided an overview of
the land (15,700 ha) that will be irrigated and what the associated
landuses will be under irrigation, by volume (49% arable, 22% Dairy, 8% Dairy
Support, 18% Red Meat, 2% trees & vines, 1% other) and by farm enterprise
(6% trees & vines; 11% dairy, 38% arable, 11% dairy support, 32% Red
Meat, 2% other).
Mr McLeod then
introduced Mr Jeremy Greer, a farmer in CHB (beef finishing). Mr Greer
explained his farming enterprise and the rationale for his decision to sign 3
contracts to take water for irrigation of feed crops, and to grow the
business.
Dr Pearce
reiterated his confidence that the RWSS will achieve financial close with
co-investors based on the uptake achieved, and be cashflow positive in its
first year at the current volume.
Discussions and queries traversed:
·
all 196 signed contracts are within the
distribution network and cover 25,700 hectares of irrigated land spread
across the command zone
·
not all of the 3 M m3 in advanced
negotiations is associated with land
·
increased uptake initially is expected to be
Foundation Water Users taking more water to increase the amount of land being
irrigated, or to put more water on the land once they’ve established
the irrigation infrastructure
·
increased uptake is also expected from
additional farming enterprises as the dam and distribution network is built
·
the concession deed sets the upward bound (105M m3)
of the amount of contracted water allowed to be sold, and sets the rules
around priorities for providing water
·
the leadership and resolve of the CHB farming community,
and the hard work of CHB professionals and HBRIC sales and support staff was
acknowledged
·
call option agreements involve paying a
significant fee (approx. $600k for 2.7M m3) to have the right
to a Foundation Water User Agreement that is forfeited if they don’t exercise
their right and sign an agreement. The earlier the option is called, the more
of the initial fee gets refunded to them.
·
Steps remaining in the process include
negotiations with the Institutional Investor, the Regional Council investment
decision, commitment of the investors, resolution of the DoC Land Swap court
action, and initiation of the construction phase
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