Scheme nears its farmer sign-up target

The Ruataniwha Dam project is still the focus of debate

A handful of Central Hawke's Bay's largest farming businesses are reviewing contracts under which each would agree to take more than a billion litres of water a year from the planned Ruataniwha dam.

If they all sign - and the dam's promoter says it is confident they will - the proposed irrigation scheme will have secured more than half the water sales it needs to proceed.

In the meantime, however, the promoter still needs to secure up to $3.3million in funding to keep the project alive - $2million of which it urgently wants to spend on geotechnical work at the dam site.

The $275million Ruataniwha project is being driven by Hawke's Bay Regional Investment Company (HBRIC), the investment arm of Hawke's Bay Regional Council, which has conditionally agreed to invest up to $80million of ratepayer money in the scheme.

The latest funding and water sales developments are contained in an HBRIC report to be considered by regional councillors at a meeting on Wednesday.

The report also reveals HBRIC has again pushed out the expected "financial close" date for the project - its self-imposed deadline for finalising a construction contract, reaching its farmer sign-up target and securing corporate and government funding - which was March 31 but is now June 30.

The report says HBRIC has signed contracts with farmers to take 9.62 million cubic metres of water (9.62 billion litres) a year and has contracts written but not yet signed for a further 13.83 million cubic metres a year.

Of the yet-to-be-signed contracts, about 10 million cubic metres worth are sitting with large farming enterprises awaiting sign-off from the boards of directors. One of the regional council's conditions of investment is that contracts for at least 40 million cubic metres a year are secured by financial close.

The project has faced delays through an ongoing legal challenge to its consents and a related environmental plan change for the Tukituki catchment and HBRIC's report says that was making sign-up negotiations "slower than we would like".

"Uncertainty around the appeals process is a barrier with some farmers as they would prefer to have the regulatory regime [consents and plan change] confirmed prior to completing a contract."

Legal issues are due to be thrashed out at a meeting of lawyers in Napier on Thursday, ordered by the board of inquiry considering the consents.

HBRIC has proposed adding a waterway ecological health monitoring process known as a macro invertebrate index to the plan change process, a move the company's chief executive, Andrew Newman, said was designed to further reinforce the scheme's commitment to improving the environment.

But Gary Taylor, executive director of the Environmental Defence Society, one of the groups that initiated the current legal challenge, said HBRIC seemed to be offering the index as a substitute to proposed nitrogen limits in water, which would weaken water quality limits.

Last year the council agreed to provide funding for the project through to the previous financial close date of March 31.

HBRIC's report does not ask the council for more funding but says it has been in discussion with the Ministry for Primary Industries and the Government's irrigation funding agency, Crown Irrigation Investments, about funding $2million of urgent geotechnical work required "to enable final design to be completed for a September start to construction".

The report also says HBRIC had "active interest" from three potential cornerstone institutional investors for the scheme and each had the capacity to provide the eight-figure funding "in their own right".