Deloitte says Hawke’s Bay council’s Ruataniwha scheme assumptions are ‘reasonable’
By Suze Metherell
April 24 (BusinessDesk) – A Deloitte review of the Hawke’s Bay Regional Council’s proposed $80 million investment in the $265 million Ruataniwha Water Storage Scheme is satisfied with the business plan, provided uptake by users is timely.
The Deloitte peer review of Hawke’s Bay Regional Investment Company’s business plan found the proposed up front capital infrastructure investment, overall cash flow and ownership model and risk management to be reasonable, but flagged the risk of slow customer uptake in the irrigation scheme as “the key risk.”
“Deloitte has identified the key risk to the project as the length of time being taken to get to full uptake of water, although they recognize that demand will eventually outstrip availability as the demand for water continues to increase,” the regional council said in a statement. The interim Deloitte report comes ahead of a final version, to be discussed at the council’s May 28 meeting.
Last month Trustpower, the electricity company controlled by Infratil, terminated its memorandum of understanding with HBRIC and fellow backer Ngai Tahu Holdings, which would have seen it invest between $50 million and $60 million of the total cost of the project. At the time Trustpower said the scheme wasn’t within its risk and return framework.
Ngai Tahu has since expressed reservations about its continued involvement. Funding is required from the government’s Crown Irrigation Investment Company under the plan for the scheme, but this will not be forthcoming without sufficient private sector backing.
Earlier this month the Tukituki Catchment Proposal Board of Inquiry granted 17 resource consents in a draft decision, allowing the proposed Ruataniwha dam to go ahead in principle.
The regional council receives the final Deloitte report next week and will vote on Wednesday on whether to start public consultation on the investment proposal.
The regional council’s investment arm argues the scheme has the potential to supply water for irrigated farming and horticultural uses to between 25,000 and 30,000 hectares of land, and would create about 2,520 jobs for the region.
“Deloitte has identified the key risk to the project is the length of time being taken to get to full uptake of water, although they recognize that demand will eventually outstrip availability as the demand for water continues to increase,” the council statement said.