Funding for dam may come with strings

00:00, Jan 24 2013

Backers of the controversial Lee Valley Community Dam hope to apply for government investment in the $41 million project by the end of the year.

However, Nelson MP Nick Smith warned today that landowner support would have to improve for the Crown to be interested in supporting the dam.

The dam is the Tasman District Council's biggest infrastructure project. Chief executive Lindsay McKenzie said he was concerned that the Crown could require a return on its investment - which might be asking a lot of the scheme.

The project will involve building a community-owned dam in the Lee Valley to store 13 million cubic metres of water, to supply rural and urban water users.

Yesterday, Primary Industries Minister David Carter announced the establishment of a company to act as a bridging investor and project selector for regional water development, using $80m earmarked for initial investment.

The process was mooted last year, when the Government signalled plans to invest up to $400m in regional schemes, to encourage third-party capital investment.


The Cabinet has now directed that $80m for the initial stages of the company's operation be set aside in this year's Budget.

Dr Smith said the Nelson region, particularly the Waimea area's capacity to produce world-class food, was limited by water supply.

The Waimea Water Augmentation Committee (WWAC) had done a sterling job developing the dam proposal, but any application would have to compete with other projects, he said.

While Nelson had progressed its plans further than most other regions, the Lee Valley scheme "would not fly without substantial farmer support", Dr Smith said.

He said water was a critical component in increasing the country's quality food exports, and farmers and horticulturists stood to make some of the biggest gains from the dam project, but they would also need to front up with a good percentage of the investment. Primary producers were also under substantial financial pressure.

The Government's scheme would provide shareholding investment to enable irrigation projects like the Lee dam to go ahead, he said.

The Crown's shares would be sold to interested landowners after construction.

WWAC chairman Murray King said he expected the committee to be in a position to apply for a proportion of the dam's funding later this year.

"I hope we are near the front of the queue, but I sense that some reluctance by a few over the last year has not helped our cause."

Mr King said the committee remained focused on getting a result, but he was frustrated by opponents who had delayed the scheme's progress, which had possibly seen it slide down the list of competing projects.

The committee had not decided how much money it would apply for, but it was likely to be "as much as we can".

"However, we also do not know the terms or strings attached to the Crown investment."

Mr McKenzie said the council was working on getting additional resources to enable WWAC and Dam Co, the final funding applicant, to be in a position to make the most of any opportunity.

He expected that the Crown would want a return on its investment, and he was concerned about the scheme's ability to be able to make a return in the traditional manner.

"The idea is great, but it could be a bit much to expect the scheme to make a return of any consequence."

Tasman deputy mayor and WWAC committee member Tim King said the Government had made it reasonably clear in the past that it did not want to be subsidising productive water users. Rather, the Crown investment would get irrigation schemes over the funding "hump".

The Nelson Mail