CPW irrigation funding complete
The Central Plains Water Scheme is the first to receive a Crown leg up.
Crown Irrigation Investments yesterday agreed the draft terms of a $6.5 million loan for the Canterbury scheme that will run between the Rakaia and Waimakariri rivers.
It is the first investment by Crown Irrigation, set up to to help establish regional -scale irrigation schemes that will speed up New Zealand's economic development.
The government has signalled it may invest up to $400 million through Crown Irrigation, which is also in talks with other irrigation proponents in the North and South Islands.
CPW says heavy machinery is ready to roll on the first stage of its Canterbury irrigation scheme with this final piece of debt funding now in place.
Stage one of the canal will run from a headrace sourcing water from the Rakaia for about 17 kilometres.
Fulton Hogan was establishing a large Te Pirita-Rakaia base for the work.
Crown Irrigation chief executive Murray Gribben said the bridging investor would partner with CPW for a period of five years.
The loan would enable excess capacity in the head race to be built during stage one construction that was needed for later stages of the scheme to distribute water to approximately 60,000 hectares of land.
"It's to fund the over capacity in a scheme that ensures it is an optimal size in the future . . . they need to build [the head race] larger in anticipation if they are going to do stage two and three."
"This scheme would not be developed to the scale required for the long term without our short-term financial support," Gribben said.
The three stage project could eventually cost in the order of $375m and Gribben said Crown Irrigation would consider funding some capacity in stages two and three of the scheme if needed.
Crown Irrigation was in talks with other groups including the North Otago Irrigation Co, the Hunter Downs Irrigation Scheme and a Ruataniwha scheme in Hawke's Bay.
CPW chief executive Derek Crombie said the company had sourced $150m including bank funding and the loan from Crown Irrigation.
Also, farmer shareholders had committed $32m.
While stage one would cost about $140m, some of the extra funds would be used to pay back existing loans, Crombie said.
A Fulton Hogan-John Holland joint venture and Downer Group have been named as the lead contractors by the CPW company. Each would earn in the order of $60m for the agreed work.
Both lead contractors were preparing for the project that would ramp up from early May after ground testing work was done, Crombie said.
Earthmoving subcontractors were already on site and building up a heavy machinery portfolio of 80 diggers, trucks, scrapers and other vehicles.