HBRC gives conditional agreement to Ruataniwha Scheme
HBRC gives conditional agreement to investing in Ruataniwha
Water Storage Scheme
Hawke’s Bay Regional Council has today voted 6-3 in favour of investing up to $80 million in the Ruataniwha Water Storage Scheme.
The decision was made in front of a full public gallery at today’s council meeting, following a public consultation phase last month which attracted close to 200 submissions.
The investment is subject to a number of conditions including farmers signing up to take at least 40 million cubic metres of water from the scheme, securing investors, gaining a workable environmental consent for the scheme and a viable design & construction contract.
The motion was moved by Councillor Debbie Hewitt (Central Hawke’s Bay Councillor) who said the water storage scheme is a legacy project for Hawke’s Bay. She said irrigation is a proven enabler which deals with the issue of not enough water and is an intergenerational gift that keeps on giving for the entire region.
The councillors who voted in favour
of the investment were:
· Fenton Wilson
(Chairman)
· Christine Scott
· Alan
Dick
· Debbie Hewitt
· Dave
Pipe
· Peter Beaven
The councillors who voted
against the investment were:
· Tom Belford
·
Rick Barker
· Rex Graham
The notice of
motion from today’s Council meeting was:
That
Council:
1. Notes the proposal to invest up to
$80million in the RWSS was submitted for public consultation
through the Council's Special Consultative Procedure which
revealed majority support for RWSS amongst public
respondents.
2. Notes the Deloitte Peer Review of the
current business case supports it in principle but that
material elements of the case remain to be finalised,
including the construction contract, capital structure and
water user uptake, and therefore the final version of the
business case upon which Financial Close is predicated could
differ from the current case.
3. Notes Deloitte's view
that investment by both HBRC and Crown Irrigation
Investments Ltd (CIIL) in RWSS is critical to it proceeding,
and that terms for CIIL investment have yet to be
agreed.
4. Notes Deloitte confirms that there are no
circumstances under the current business case where HBRC
would be called upon to fund returns to other equity
investors.
5. Notes Nimmo Bell's view that RWSS is
likely to generate a greater benefit for the regional
economy and higher financial returns to HBRC than other
available alternative investments.
6. Notes the Draft
Decision of the EPA Board of Inquiry grants consents for
RWSS but the final conditions set for Plan Change 6 may
impact adversely on affected farmers and the viability of
RWSS. A Final Decision is expected from the Board of Inquiry
by 28 June 2014.
7. Notes HBRIC Ltd has extended
Financial Close and the requirements for satisfaction of its
Conditions Precedent to 30 September 2014.
8. Resolves
to invest up to $80 million in RWSS subject to Council being
satisfied with:
8.1. its own legal advice on the RWSS
documents and all related legal matters;
8.2. a
further review of the final RWSS business case as at the new
Financial Close and Council being satisfied with its advice
and the steps taken (if any) by HBRIC Ltd to resolve key
issues of concern (if any) then identified in the course of
Deloitte's review;
8.3. advice from HBRIC Ltd that all
Conditions Precedent to Financial Close of the investment by
all investing parties in the Ruataniwha Water Storage Scheme
Limited Partnership (RWLP) have been either satisfied or
waived by agreement of the parties. These Conditions
Precedent are:
8.3.1. The EPA granting satisfactory
resource consent conditions for RWSS infrastructure and
operations, which in turn are recommended as being workable
by all investors;
8.3.2. Agreements to purchase a
minimum of 40 million cubic metres of water per annum (Water
User Agreements) and that the RWLP has committed to supply a
minimum of 40 million cubic metres;
8.3.3. Securing
the funding required to build and operate the RWSS
infrastructure; and,
8.3.4. Obtaining a bankable
construction contract which adequately addresses
construction risk allocation through a fixed-time,
fixed-cost arrangement.
8.4. a Certificate issued by
HBRIC Ltd's legal advisers:
8.4.1. summarising the
terms of all executed Water User Agreements;
8.4.2.
identifying the water user parties who executed the
Agreements; and,
8.4.3. explaining the enforceability
or otherwise of the Agreements.
8.5. HBRIC Ltd
increasing its annual distributions to HBRC to provide a 6%
return to HBRC on the funds HBRIC Ltd draws down from HBRC
from time to time to invest in the RWSS, up to a maximum
investment of $80 million.
9. Requires HBRIC Ltd to
keep the Council informed on progress toward meeting the
conditions stipulated in Recommendation 2 over the period to
the new Financial Close.
10. Advises all submitters to
the Special Consultative Procedure of its decisions, in
writing, and thanks them for their
input.
ends