Saudi deal includes high-tech abattoir

About $11.5 million has been spent on sending New Zealand sheep and equipment to businessman Hamood Al Khalaf's farm in Saudi Arabia. Photo / File

Taxpayer money will be spent on an abattoir that could be gifted to Saudi Arabia - part of a deal done partly to secure a free-trade deal with Gulf states.

There is uncertainty about who will ultimately own the abattoir, with officials admitting they do "not know exactly what the Saudi Government's involvement will be".

About $11.5 million has been spent on sending New Zealand sheep and equipment to businessman Hamood Al Khalaf's farm in Saudi Arabia, with $6million of that spent on establishing a farm, including equipment and technology.

Foreign Minister Murray McCully has said it was partly done to appease Mr Al Khalaf, who lost millions of dollars during a New Zealand ban on live sheep exports.

His ill feeling was a major obstacle in the way of a free-trade deal in the region, Mr McCully said, and negotiations were now able to move on.

The farm would also act as a demonstration base for New Zealand agribusiness, and remove the threat of legal action.

Opposition parties have labelled the deal a bribe, after a $4 million payment to the Al Khalaf Group was revealed, and that the farm and all animals and equipment would be owned by the group.

However, it has now emerged that a key part of the farm kit-out - a state-of-the-art abattoir - could be gifted to the Saudi Government.

A briefing paper among hundreds of pages of redacted documents released by the Government notes that all 2000 slaughterhouses in Saudi Arabia are Government-owned.

"In this case, the Saudi Government appears prepared to allow Al Khalaf Group to build an abattoir that would then be gifted to the Saudi Government and leased back to the group," the document notes.

A spokeswoman for New Zealand Trade and Enterprise, the agency overseeing the farm project, said the abattoir design had been completed, but construction had not begun.

The New Zealand contribution was expected to be one third of the estimated total costs, she said, and the abattoir would be owned by the Al Khalaf Group.

Labour's export growth and trade spokesman, David Parker, who has been heavily critical of the deal, said the confusion showed how many unknowns there were in the agreement.