Central Plains irrigation scheme seeks $43M in capital-raising

Friday 13th September 2013

The $145 million dollar first stage of a major South Canterbury irrigation scheme, Central Plains Water, has taken a big step forward with farmers in the catchment being offered shares in a private capital-raising of up to $45 million.

CPW says in offer documents lodged at the Companies Office on Sept. 4 that it is seeking to raise a total of $185 million to complete stage one, pay down existing loans and deal with the fact that it currently carries negative equity of $13.5 million at June 30, and rising.

The company is also in negotiation with Crown Irrigation Ltd, the government's vehicle for doling out promised funds of $35 million a year over five years in assistance to get major irrigation projects off the ground, announced in the 2011 Budget and implemented from this year.

The scale of capital needs has typically been a barrier to progress as potential farmer-shareholders may not agree on timing or could struggle with bank funding.

More efficient use of freshwater resources, particularly for agricultural irrigation to extend the reach of dairying, has been a major policy priority since the National-led government won the 2008 election.

CPW has been on the books since 2003, and is only now approaching the first stage of a larger scheme. It will use water from Lake Coleridge, currently maintained by Infratil-controlled TrustPower, to irrigate an area south of the Hororata River and will require 2.5 million cubic metres of earth to be used to build a headrace mechanism to take water from the Rakaia River.

TrustPower is not an investor in the scheme, which is open only to farmers who will participate in the water-sharing scheme.

Participation costs $1,750 per share for stage one development rights, $200 a share for early rights on stage 2, and works out roughly to a cost of $23,000 per hectare for irrigation rights. There will be annual ongoing costs of around $720 per hectare. The minimum to be raised by both parts of the float is $17.5 million, and the maximum $45 million, with oversubscriptions.

Water would become available in 2015.

The CPW move comes as other major schemes also make progress.

Another South Canterbury project, being co-funded by state-owned hydro-electricity generator Meridian Energy, has gained $640,000 of new funding from the Ministry for Primary Industries' Irrigation Acceleration Fund.

The funding will assist the Hunter Downs Development Company Limited to establish a design team to undertake the project's engineering design, investigate farmer demand for the scheme, and raise funds for the scheme's further stages, a statement from the company says.

"Once the feasibility of the project is determined, the HDI Scheme intends to use Waitaki water to irrigate up to 40,000 hectares north to Otipua. This will service between 200 and 300 land owners within a total command area of 60,000 hectares," said Hunter Downs Irrigation Limited chair Andrew Fraser.

Construction is anticipated to begin in early 2016.

Meanwhile, the Wairarapa Water Use Project, seeking to add 30,000 hectares of irrigation to 12,000 hectares at present. While still at an early stage, the project has narrowed its considerations to five areas: White Rock, Mangatarere, Black Creek, Te Mara, and Tividale.

BusinessDesk.co.nz

Comments from our readers

No comments yet