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

 

Half Empty: Fonterra's 2017 Opening Forecast Below Expectations

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected as the world's largest dairy exporter predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. More>>

ALSO:

Pest Control: Mouse Blitz Team Leaves For Antipodes

The Million Dollar Mouse project to rid Antipodes Island of mice is underway with the departure of a rodent eradication team to the remote nature reserve and World Heritage Area. More>>

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Fulton Hogan's Heroes: Managing Director Nick Miller Resigns

Fulton Hogan managing director Nick Miller will leave the privately owned construction company after seven years in charge. The Dunedin-based company has kicked off a search for a replacement, and Miller will stay on at the helm until March next year, or until a successor has been appointed and a transition period completed. More>>

ALSO:

Gordon Campbell: On Electricity, Executions, And Bob Dylan

The Electricity Authority has unveiled the final version of its pricing plan for electricity transmission. This will change the way transmission prices (which comprise about 10% of the average power bill) are computed, and will add hundreds of dollars a year to power bills for many ordinary consumers. More>>

ALSO:

Half Empty: Fonterra NZ, Australia Milk Collection Drops In Season

Fonterra Cooperative Group says milk collection is down in New Zealand and Australia, its two largest markets, in the first 11 months of the season during a period of weak dairy prices. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news