Council backs Tarras irrigation scheme
The Central Otago District Council has pledged its support for a proposed $39 million irrigation scheme at Tarras.
No funds were committed to Tarras Water Ltd at yesterday's council meeting in Alexandra but councillors agreed to look at guaranteeing a loan on the scheme's $26m of bank debt.
This would allow the Tarras project to borrow with a lower equity ratio and would also reduce the interest rate charge, the council's chief executive, Phil Melhopt, said.
A request to support irrigation expansion had arisen during the council's long-term plan consultation process.
With the potential to irrigate 6800ha, the Tarras project was in the final planning stages.
Using water pumped from the Clutha River and piped directly to farms, the scheme had the potential to add $17.8m per annum to the local economy and ultimately to create 179 new jobs, Mr Melhopt said.
It had received some opposition, with concerns about council supporting what was viewed as "private business with public money", his report stated.
But in light of potential revenue and the fact that several South Island councils had provided financial support to local irrigation schemes, a $10m loan in the case of Waitaki District Council, Mr Melhopt advised the council to consider a similar course of action. It was expected the same sort of scheme would eventuate in Alexandra's Manuherikia catchment.
The council resolved to support the creation of a "loan guarantee mechanism" for use in approved infrastructure in the district. This would be capped at a maximum of 20 per cent of scheme capital value, and the term of any guarantee limited to a maximum of five years.
It also resolved that the targeted rate mechanism be developed for recovery of any future call from scheme shareholders, and that the council would support the provision of a 20 per cent loan guarantee to Tarras Water.
The council reserved the right to appoint a director or observer in conjunction with the other key stakeholder, Otago Regional Council.
Approval of the support plan was contingent on a successful prospectus and satisfactory resolution of due diligence criteria, which also depended upon 30 per cent shareholding support along with an environment grant from the regional council.
- © Fairfax NZ News
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