Ngai Tahu follows the water

BEFORE AND AFTER: An image of the Ruataniwha dam
BEFORE AND AFTER: An image of the Ruataniwha dam

Ngai Tahu's commercial arm is interested in more irrigation investments after signalling a potential $53 million investment in the controversial $265m Ruataniwha water storage scheme in Hawke's Bay.

It is its first separate irrigation investment not related to land that it owns.

Mike Sang, chief executive of Ngai Tahu Holdings Corporation, said yesterday that as the company grew in scale it was searching for good opportunities that fitted its investment profile.

Ngai Tahu and electricity firm TrustPower have announced an intention to invest in the water storage scheme which will dam the Makaroro River.

The scheme hit the headlines last week when Radio New Zealand revealed that a Department of Conservation draft report, which criticised the project's effect on water quality and the management plan for the affected rivers, was cut from 32 pages to two paragraphs and did not mention those concerns.

However, the water storage scheme does not necessarily have the full support of local iwi Ngati Kahungunu.

The iwi has yet to determine its position.

It has been reported that Ngai Tahu's kaiwhakahaere, Sir Mark Solomon, has told Ngati Kahungunu that the South Island tribe would not go ahead with the investment if Ngati Kahungunu opposed it. Solomon said yesterday: "There are many issues that all parties are working through and we have had discussions with Ngati Kahungunu and stand by those discussions.

"There is still a long way to go in this process, including the independent board of inquiry phase, which our investment company has welcomed."

Sang said Ngai Tahu was working closely with TrustPower on the project.

"Ngai Tahu and TrustPower will equally invest up to 30 per cent to 40 per cent of the initial capital cost."

The capital cost is estimated to be $265m and that includes a dam and distribution infrastructure.

The water scheme is the project of the Hawke's Bay Regional Council which has a separate company, Hawke's Bay Regional Investment Company, to manage the project.

Managing director Andrew Newman said the company was keeping the option for farmers and landowners to invest in the scheme but no money was being sought at the moment.

The investment in Ruataniwha is part of Ngai Tahu's development aspirations in the rural sector. It is piloting the conversion of some forestry land into three dairy farms in north Canterbury.

It owns 83,000 hectares in the South Island with 90 per cent of that leased to forestry companies but is looking to develop some of that into agricultural uses.

"We have a strong balance sheet, with nearly $1 billion in assets, and have already committed capital to the likes of HWP [Hurunui water project] and other investments related to our rural lands and farming operations," Sang said. "We remain open to new investments in irrigation and infrastructure generally."

As for other irrigation investment, it held its own water rights and the company was an investor in irrigation schemes for its own properties in North Canterbury, but Ruataniwha was a separate investment unrelated to its own properties.

Sang said Ngai Tahu had about $100m allocated to infrastructure investments that was not currently used.

"Infrastructure assets, including irrigation, can provide strong long-term cashflows that underpin and support our portfolio and dividend distribution policies, and hence we are keen to find good infrastructure companies."