Hawke's Bay Regional Council to vote on ending Ruataniwha funding, writing-off $14M debt
By Jonathan Underhill
Aug. 28 (BusinessDesk) - The Hawke's Bay Regional Council will vote this week on whether to stop any further investment in the Ruataniwha Water Storage Scheme and write-off a $14 million debt owed by its investment company.
The vote on Wednesday comes as a result of a report into options following the Supreme Court decision to reject a Department of Conservation land swap need to create the storage scheme reservoir.
The council's investment arm, Hawke’s Bay Regional Investment Co (HBRIC), owes $14 million to the council made up of $7 million of charges and $7 million of cash advances, according to the council report. For its part, HBRIC has an intangible asset of $19.5 million on its books related to the feasibility and development costs of RWSS. This was funded with the $14 million advance from the council and $5.5 million from external debt.
"Due to the uncertainty of when and if the scheme can proceed, the value of this intangible asset is in question and HBRIC is likely to write-down a material portion of the intangible asset value," the report says. "HBRIC is to maintain operational costs associated with RWSS and explore options to find a buyer to proceed with the scheme." Those costs are estimated to be about $100,000 a year.
The report also recommends the council "notes and supports HBRIC's intention to continue to explore options for progressing the RWSS without further council funding."
Council chief executive James Palmer said the council "needs to formally decide to stop investing in the development of the scheme and no longer ring-fence council funds for this purpose."
“The regional council has a number of priorities to address. To support this the council has initiated a capital structure review on the council’s entire balance sheet, which includes the best use for the $66 million investment presently allocated to the now uncertain Ruataniwha scheme,” he said in a statement.
Last month, HBRIC and Conservation Minister Maggie Barry failed to overturn a Court of Appeal ruling that quashed a land-swap deal involving conservation land needed to dam the Makaroro River, creating a 93 million cubic metre reservoir and providing water for the $275 million irrigation scheme, which could have lifted production on 25,000 hectares of farmland in central Hawke's Bay.
HBRIC CEO Blair O’Keeffe said if the scheme is to proceed in some form, "it is best led by other investors, which has proven successful elsewhere."