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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

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