Irrigation project soars in cost
Backers of the Central Plains Water irrigation scheme have lifted the total cost of the Canterbury irrigation plan by 50 per cent to $375 million.
The $375m total was a "ballpark" figure based on an average construction cost of $6000-$6500 per hectare of land irrigated, CPW general manager Derek Crombie said.
The total estimated value of the build in two or three stages has grown from a $250m estimate in 2010.
However, this was an indicative figure, not an audited number, Crombie said.
"We're sort of in the range of $350m-$400m, but because we haven't detailed the design of the rest of the scheme yet, it's just [on] a dollars-per- hectares basis."
Farmer shareholders appeared willing to stump up for the first stage of the land irrigation plan costed at $150m, Crombie said.
Crombie was this week among those leading a roadshow to explain the financial commitment required by farmers to construct the canal project they hope will one day run 56 kilometres between the Rakaia and Waimakariri rivers.
Around $140m extra was needed given $10m had been sourced for the design of the scheme, starting from the Rakaia river. About $100m would come from bank debt with $30m of capital to be raised from farmer shareholders for stage one.
The extra $10m of equity needed would come from either a further farmer contribution, or the Government or another shareholder coming in to back the scheme.
Crombie said CPW had met the banks, farmer advisers and rural accountants on Monday.
The 60 financiers and advisers had provided positive feedback about the proposed split of funding between a capital raising and extra annual fees charged to farmers on a per hectare basis.
CPW had also met about 60-70 farmer representatives in Dunsandel this week. The company had indicated that annual fees would be in the order of $550 and $650 per hectare, with farmers accepting of that guideline.
"In the terms of other irrigation companies that's fairly typical.
"One farmer got up and said that's less than what he's currently paying for pumping costs."
Further meetings were planned with farmers in Greendale this week and in Darfield next week. A good representation of the total 350 shareholders already in CPW was expected across the three meetings.
Crombie said the $100m of debt could be paid back with interest over 30 years.
CPW had not had direct discussions with banks about that amount of debt, though they were supportive of the scheme.
Stage one of the scheme would total about 20,000 hectares located between the canal and the coast.
Some of the bigger CPW shareholders at the meeting included Synlait Farms, Dairy Holdings (linked to Colin Armer and Alan Pye) and Canterbury Grasslands. Together those three farm groups had more than 7000 hectares.
"One of them stood up [at the meeting] and said they're committed and they recommend the scheme to go ahead," Crombie said.
CPW planned to hold a special shareholders meeting in July to vote on a capital raising scheme, which would allow a prospectus to be issued in September.
"At the moment we're just asking people for an indicative commitment," he said.