ORC may pour cold water on Tarras plan

23:42, Feb 19 2013

The Otago Regional Council appears to be listening to those who say it should not buy in to a $39 million irrigation scheme in Tarras, with the council likely to reject financial help for it.

The council will meet today and discuss a recommendation from its hearing committee that it does not support Tarras Water Ltd in its Tarras irrigation scheme.

Tarras Water asked the council to buy $3.5 million of redeemable preference shares and pay up to $500,000 annually for five years, toward the fixed costs.

The scheme would supply 40 households in Tarras with water pumped from the Clutha River, irrigating 6000ha. If the council agreed to the investment it was proposed the remaining cost of the plan, about $27.4m, would be funded through a bank loan.

The council received 68 submissions on a proposed amendment to its 2012-22 long term plan which would allow the council to invest in the scheme, with 55 opposed to the investment.

A report which will be presented to the council says the council will only receive a return when its shares were sold or redeemed and as it would not receive any income during the first years of investing general rates would rise.


The proposal was also assessed as being a high risk and if it failed the ORC would rank behind all secure and unsecured creditors. Another "major risk" was that there would be no readily available option for it to sell its investment.

However, the 12 submissions which supported the proposal said there were significant environmental and economic benefits both locally and region-wide by boosting farm production and the investment would assist the viability of the scheme.

Many of the opposing submitters were in support of an irrigation scheme for Tarras but did not support the ORC's involvement as an investor.

Concerns were raised by submitters that the investment was too risky, it would be used as a precedent for investment in other companies and the scheme would lead to increased dairy farming which would impact the environment and water quality.

About 12 said the council had no mandate to invest ratepayer funds into a private venture.

If the council agreed with the recommendation a bank loan guarantee from the Central Otago District Council, which agreed to act as a 20 per cent guarantor on the condition the ORC supported it, would be at risk.

Central Otago mayor Tony Lepper said it would be "sort of surprising" if the council decided not to back the scheme as it appeared to have supported it up until now.

The Southland Times