Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Trustpower backs out of Ruataniwha water scheme

Trustpower backs out of Ruataniwha water scheme as council sets public consultation

By Paul McBeth and Pattrick Smellie

March 27 (BusinessDesk) - Trustpower, the electricity company controlled by Infratil, has walked away from the $265 million Ruataniwha water storage scheme, the same day the Hawke’s Bay Regional Council set the timeline for public consultation.

The power company terminated its memorandum of understanding with the council subsidiary, Hawke’s Bay Regional Investment Company, and Ngai Tahu Holdings, which would have seen it invest between $50 million and $60 million of the total cost of the project. The council investment company this week recommended the local authority invest up to $80 million in the scheme.

“Trustpower has determined that it will not be possible to invest within its risk and return framework for a project of this nature,” the company said in a statement.

While there was clearly sufficient short term appetite for the scheme to justify its construction, the long term uptake by farmers and other irrigators was not strong enough for TrustPower to feel comfortable committing shareholders’ funds, the Tauranga-based company’s general manager, operations, Chris O’Hara told BusinessDesk.

“Projected cashflows were not meeting a rate of return that would meet shareholder expectations,” he said. While the project was politically contentious, that was not a factor in TrustPower’s decision.

O’Hara questioned the viability of any other proposed greenfields irrigation schemes, given the Ruataniwha scheme was “among the best greenfields opportunities in New Zealand.”

“If this one can be made to work, I’m not sjure there’s another one that will take its place.”

TrustPower also has irrigation schemes on the books on the Canterbury Plains, which would also generate hydro-electricity. However, they differed from the Hawke’s Bay scheme because they relied on the relatively large natural storage available in Lake Coleridge. The Ruataniwha scheme requires the construction of a storage dam.

TrustPower’s move comes less than three weeks after HBRIC issued a preliminary investment memorandum seeking expressions of interest from investors in the region to participate in the scheme, which will require the support of farmers and other irrigators in the catchment in order to be economically viable.

It coincides with the council’s release today of a timeline for consultations on the contentious scheme, which has sparked national debate over its potential impact on the Tukituki River and the growing intensification of dairy farming.

Last September Trustpower and Ngai Tahu’s investment arm said they might fund 30 percent to 40 percent of the project. The council said the scheme had the potential to supply water for irrigated farming and horticultural uses to between 25,000 and 30,000 hectares of land, and was expected to create about 2,520 jobs for the region.

The council today set the timeline for public consultation with a view to making a final decision on June 25, having released its 70 page business plan for the scheme yesterday.

The proposed dam became a political football last year when Conservation Minister Nick Smith was forced to deny he had tried to hose down his department’s concerns about potential water pollution or meddle with its submission.

The Labour Party’s water spokesperson, Whita Maitiri, launched a private members’ bill, dubbed the “Don’t Turn the Tukituki Toxic” Bill today on the banks of the Tukituki River.

Shares in Trustpower were unchanged at $6.49 today. The company is likely to brief in greater detail at next Thursday’s Infratil investor day in Wellington.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Going Dutch: Fonterra Kicks Off $144M Partnership With Dutch Cheese Maker

Fonterra Co-operative Group, the world’s largest dairy exporter, has commissioned a new dairy ingredients plant in Heerenveen, in the north of the Netherlands, its first wholly-owned and operated ingredients plant in Europe. More>>

ALSO:

Scoop Business: NZ Retail Sales Beat Estimates

New Zealand retail sales rose more than expected in the fourth quarter, led by vehicle-related transactions, food and beverages, adding to evidence that cheap credit and a growing jobs market are encouraging consumers to spend. More>>

ALSO:

Delivery Cuts Go Ahead: 'Government Money Grab' From NZ Post

"It's a money grab by the Government as the shareholder of New Zealand Post" says Postal Workers Union advocate Graeme Clarke about the changes announced by NZ Post. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news