Ruataniwha Water Scheme HB Today Public Meeting 6 August 2015 H AWKE’S B AY R EGIONAL HBRIC is a subsidiary (CCO) of I NVESTMENT C OMPANY L TD Hawke’s Bay Regional Council
What we’ll cover • What is the RWSS? • What the RWSS will do for Hawke’s Bay? • How is the environment protected? • Signing up farmers to the scheme • Who’s building the dam? • Who’s looking to invest in the scheme? • The process to a final decision HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
What is the Ruataniwha Water Storage Scheme? This irrigation scheme will give our region the lift it needs to hold its own in regional New Zealand • A long term sustainable water supply solution for Central Hawke’s Bay • It will insulate the community from the progressive effects of climate change • In the combination with Plan Change 6, it will improve the rivers and streams in the Tukituki catchment HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
What will RWSS do for Hawke’s Bay? This irrigation scheme will give our region the lift it needs to hold its own in regional New Zealand • Create more than 2,000 ongoing jobs • Breathe life into Waipukurau & Waipawa • Inject at least $200 million a year into the region’s GDP • Strengthen the social fabric of our rural communities • Give us a better Tukituki River HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
How is the environment protected? The irrigation company will meet and in some areas exceed its responsibilities to protect the environment • The Board of Inquiry has granted the scheme consents for 35 years • A wide range of farming systems are viable within the consents • The framework ensures continued environmental improvement • Aquatic life will improve HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
How is the environment protected? We will focus on the broad ecological health of the river through strategies such as: • Farm Environment Plans • Nutrient Management • Stock exclusion • Riparian planting • Ecological health monitoring and response • Minimum, augmented & flushing flows in rivers HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
Signing up farmers to the Scheme The irrigation company will provide leadership to the regional rural sector. • We need to sell a minimum of 45 million cubic metres of water for the scheme to proceed • There’s potential to irrigate around 27,000 hectares of land. • The more farmers who sign up the better it is for everyone. HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
How much water have we sold? HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
What kind of farming will we see? HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
Who’s looking to invest in the scheme? The scheme will be a mix of public and private ownership • HBRC – subject to conditions will invest up to $80million • Government – potentially through Crown Irrigation Investments Ltd • Private investors – some are currently undertaking due diligence • Local investors also have the opportunity HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
Who will own the scheme? The irrigation company will create an asset that will eventually come into community ownership once it’s paid off. • The scheme is being set up as a BOOT – Build, Own, Operate, Transfer. • Example -Transmission Gully in Wellington • It will revert to public and local ownership in 70 years at no cost • This asset and the community are protected through a concession deed HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
Who’s building the Scheme? OHL/Hawkins will build the dam and distribution network • They are experts in building dams • I t’s a fixed time/fixed price contract. • It will take around three years to build. Dam type: Central core rock fill dam Dam height: 83 metres high Reservoir length: 7 kilometres long Storage volume: 93 million cubic metres HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
Page 13 Does the Project Stack up? At full uptake, does the project stack up? Let’s assume: Operating Cash Flows: - Project cost of $275m; Water Distribution Revenue $27,040,000. - 75% bank debt, 25% private sector Generation Revenue & Spot Sales $3,600,000 investment; Operating Costs ($5,900,000) - Interest rate of 6.5%; Operating Cash Flow $24,740,000 . - Equity return target 16.0% - Water charge of 26c/m 3 ; Financing Cash Flows: - 104* million m3 contracts sold; and Bank debt payments $13,406,250 - Generation, spot sales and operating costs (75%*6.5%*$275m) as per the Deloitte Report. Equity Dividends $11,000,000 (25%*16.0%*$275m) Total Payments $24,406,250 * on average there is 200Mm3 of water each year, so this still leaves plenty to improve summer river flows and flush Project WACC (return) ~9% the river to benefit aquatic life For a long term infrastructure investment without demand risk (full uptake), project return (WACC) of circa 9% has been benchmarked against other NZ and global BOOT projects. At the current water charge, project economics work.
Where are we at right now? • Consents are granted for the scheme - HBRC has signed this off as a condition met • Good momentum on water uptake with farmers – deadline mid Nov to sign up for the scheme to proceed • Investors undertaking due diligence – announcement end of Sept • Revalidating the construction price – completed Sept Aim to have all conditions met by the end of Nov HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
The process to a final decision HBRIC Ltd Chairman Andy Pearce will outline the process from here after the panel discussion. HAWKE’S BAY REGIONAL INVESTMENT COMPANY LTD
Recommend
More recommend
