Local Govt | National News Video | Parliament Headlines | Politics Headlines | Search

 


Dam cracks


Dam cracks

Thu, Mar 27 2014

By now, everyone knows Trustpower has pulled out as a prospective $50-60 million investor in the CHB dam.

The questions that now need to be addressed are fairly obvious:

1. Will there be a domino effect?

To some degree Ngai Tahu, the south island Maori investment company considering an equivalent size investment, found the involvement of a savvy infrastructure partner like Trustpower reassuring. Will Ngai Tahu’s confidence be fatally shaken? Especially since any investment they might consider will require further consultation with Ngati Kahungunu, our largest iwi in the region, which does not support the dam.

2. How will HBRIC plug a $50 million or so hole in the dam (twice that amount if Ngai Tahu backs out)?

The pullout of knowledgeable investor Transpower — which has been intimately involved in the details of the proposed venture, indeed paying for some of the development expense — will doubtless have an impact on the assessment of any new potential investor … including far less expert and informed investors, like ‘rich people in Hawke’s Bay’.

3. How does this affect the assessment of the Crown — Crown Irrigation Investment Ltd (CIIL)?

CIIL is on the blackboard for another $100 million or so, as a secured loan. But CIIL has always made clear it would be a ‘last resort’ partner. What is the minimum Council and private investment CIIL would demand to see firmly established before entering the deal. CIIL has also said farmer uptake (firm contracts to buy the water) must be robust, ensuring a strong revenue base, before it would commit funds. But it is precisely the unpredictable and quite possibly slow ramp-up of farmer participation, as assessed by Trustpower, that caused Trustpower to exit.

4. What about those CHB farmers, anyway?

“Expressions of Interest” (EOIs) — which obligate farmers who have signed them tonothing — now total 42% of available water from the dam. HBRIC indicates that 40% of available water must actually be locked up by firm purchase contracts for the scheme to be at all financially viable. If ‘no obligation’ EOIs have peaked at 42%, how realistic is that nearly all of these would be converted to firm 35-year water purchase contracts? And realistically, how long might that take … for example, by the ‘financial close’ target date of 30 June?

Moreover, HBRIC and HBRC Chairman Fenton Wilson, looking to ‘make a silk purse out of a sow’s ear’, now tout the withdrawal of Trustpower as opening the door to the opportunity for farmers in CHB to invest in the dam themselves. Wait a minute … why didn’t we start there (as in other NZ irrigation schemes)? Precisely because that level of available capital was judged to simply not exist amongst CHB farmers. Indeed, the whole financial structure of the deal has been designed to subsidise approximately 50% of the cost of the water. Why? Because CHB farmers couldn’t otherwise afford it.

The notion that the venture can climb from 42% no-obligation EOIs to 40% firm contracts to farmers filling a $50 million capital gap on top of that seems — to put it generously — ambitious.

5. How quickly can a new investor package be cobbled together?

HBRIC says it is in active talks with new prospects. However, if prospects capable of $50 million high risk, low return investments were readily available, clamouring outside HBRIC CEO Andrew Newman’s office as I write, why weren’t they part of the deal in the first place? The risk would have been more widely spread (including the contingency of one party getting cold feet prior to financial close), and HBRC and CIIL might have been required to put up less ratepayer and taxpayer money. Moreover, it would have been easier to recruit them before the bail-out of a savvy investor like TrustPower.

Seems like it will be tough to meet that 30 June deadline.

These are the questions I have as a Regional Councillor.

But they are questions for every Hawke’s Bay ratepayer … who are as much entitled to a full and compelling response as I am, if this project is to proceed.

Tom Belford

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Transport: Auckland Looks To Light Rail

The Board of Auckland Transport has called for an investigation into a light rail network, which could relieve traffic congestion on some of the region’s busiest roads.

This stems from work in 2012 (the City Centre Future Access study) which responded to a government request to develop a robust and achievable solution for access to the CBD.

That showed that the City Rail Link, together with surface bus improvement, provided the best regional solution. However, it also identified that the city centre is already facing serious congestion across all major road entry points which, if not addressed now, will worsen. More>>

 

RMA: Smith's Claims Don't Match Evidence - Greens

The Motu group’s research into the impacts of planning rules looked at the costs related to housing development but not the benefits of environmental protections and does not recommend significant changes to the RMA to reduce the cost of new house builds. More>>

ALSO:

Gordon Campbell: On The Similarities Between John Key And David Cameron

For years now, David Cameron has been the closest available thing to a mentor/analogue to our Prime Minister, such that Key watchers could be interested in an analysis of Cameron that appeared in the British press over the Christmas break. More>>

Gordon Campbell: On Ian Fletcher Resignation & GCSB’s New Role

It may well be that after being shoulder-tapped in Queensland for the GCSB job, three years of living in Wellington has been enough for Fletcher and his family, given that the pending review of the GCSB would have required an even longer commitment from him. Three years of Wellington’s weather is enough for anyone... More>>

ALSO:

Ian Apperley: $10m Or $100m For New Wellington Council IT System?

I feel a Tui Billboard coming on. I commented the other day that it looked like the Council’s Ninth big project was a potential $100 million plus... The Mayor has responded: “I am reassured by the Chief Executive and by Anthony Wilson that the proposed budget is in the region of $10 million.” More>>

ALSO:

Southern Ocean:
Navy Intercepts Illegal Fishing Vessels

Foreign Minister Murray McCully today put illegal fishing vessels operating in the Southern Ocean on notice and vowed to take action against their owners. “As part of a multi-agency operation, the HMNZS WELLINGTON has intercepted two vessels claiming to be flagged to Equatorial Guinea, fishing illegally in the Southern Ocean.” Mr McCully says. More>>

ALSO:

Kiwi Pride: New Zealand Takes UN Security Council Seat

“New Zealand’s term on the Security Council will place us at the heart of international decision-making for the next two years,” Mr McCully says. More>>

Greens: CAA Airport Door Report Conflicts With Brownlee’s Claims

The heavily redacted report into the incident shows conflicting versions of events as told by Gerry Brownlee and the Christchurch airport security staff. The report disputes Brownlee’s claim that he was allowed through, and states that he instead pushed his way through. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Regional
Search Scoop  
 
 
Powered by Vodafone
NZ independent news