Proposed irrigation scheme cuts costs as build nears

The final costings and design of the Hunter Downs Irrigation Scheme were released last December, and initial costings have been cut by at least 20%.

The Hunter Downs scheme proposes to irrigate land from near Waimate, up the coast to south of Timaru and west toward the Hunters Hills. The scheme has been designed for 161 water users with a maximum 214 offtakes covering 21,000ha.

Hunter Downs Water (HDW) chairman Andrew Fraser says the total projected construction cost is now about $195 million. This cost translates to $9285/ha, including the funding costs during building. The scheme was initially costed at $160m-$250m.

Fraser says the savings arise mostly from a new water delivery method, explained at the company’s annual general meeting last month.

Rooney Earthmoving Ltd (REL) created a specimen design which “has achieved the goal of significantly reducing anticipated scheme build costs and seeks to ensure efficient operating costs,” Fraser explained.

The total projected cost for the scheme is $195m -- $9285/ha.

The scheme would be jointly funded by shareholders and ANZ Bank: shareholders would put up $2650/ha and the rest would be raised by bank debt.

HDW shareholders would likely be called on for an equity payment of $2650/ha in three instalments, the first expected in April 2017.

“We are on a tight timeframe to secure enough farmer support and begin the scheme build by May next year,” he says. “We’re now entering a critical period where a decision to be part of the scheme must be made. If there is not enough shareholder support for the scheme it will not go ahead.”

Water would be taken from the Waitaki River using the existing Morven Glenavy irrigation infrastructure at Bells Pond. HDW has consents to take 17.5 cumecs of water from the Waitaki River.

Water would be carried using existing, but upgraded, races as far north as Otaio under gravity. This would use a combination of open race networks and 7 cubic metre (cumecs) capacity pipes to transport the water to two storage reservoirs.

Twelve pumping stations would be installed, including three pumping stations along the main pipeline. Water would then be pumped via three main pipes, each of which has three smaller pumping stations and three buffer ponds, gravity feeding water to HDW irrigators.

REL proposes to build the intake facilities and upgrade the existing irrigation plant during its winter shutdown.

HDW’s operating costs are estimated at $680/ha each year, including operating costs of $295/ha and funding costs of $385/ha, based on a 21,000ha scheme and uptake. These include electricity, use of existing irrigation race charges, scheme administration and operating costs.

Fraser says HDW is seeking a balance between minimising the up-front investment required from farmers against the affordability of the annual operating costs; so it has decided on a jointly funded ‘co-operative’ model – share- holding and bank debt. A preferred bank has been appointed.

Key terms are a 2.5 year construction loan facility followed by an amortising loan over 42 years. Shareholder equity is likely to be set at 28.5% of total scheme cost – about $2650/ha.

The funding costs are based on borrowing $140 million, repaid over 42 years at 5% interest. The irrigated area is 21,000ha of a total command area of 68,000ha with an application rate of 2.65mm/day.

Fraser says HDW plans to start building in May this year, and water is expected to begin flowing in the spring of 2019.