Agreement reached over dam project
A letter has been signed outlining the commitments of intended parties to the multimillion-dollar Waimea dam project.
Tasman District Council and Waimea Irrigators Ltd (WIL) are likely joint-venture partners in the $82.5 million project in the Lee Valley, near Nelson. Crown Irrigation Investments Ltd (CIIL) is a proposed funder of the dam, which is tipped to provide a loan of up to $25m to WIL and an interest-free loan of $10m to the council.
The council and WIL have cosigned a letter proposed by CIIL that sets out agreement on the terms for capital raising, water supply and the obligations of each party.
Council chief executive Lindsay McKenzie said the letter was significant because it locked in a set of agreements that would underpin the council’s Statement of Proposal, which is due to be finalised and go out for public consultation this month.
‘‘The reason this is important is because until the JV [joint venture] is formed, there’s no legal entity that binds us to anything and so what we’ve needed to do is put a document together that commits the intending partners to certain process steps in the absence of the company.’’
A company could not be formed until the statutory consultation was complete, McKenzie said.
‘‘We wanted to close off the risk we might have faced going into the statutory consultation process without a letter that commits the other parties to do their part of the bargain.’’
The terms were not legally binding but the letter obligated the parties to use reasonable endeavours to complete the remaining steps. Those included public consultation by the council, WIL successfully raising capital through the sale of shares, securing the necessary land, an agreed pre-construction cost allocation, and finalising a successful tender for construction of the dam.
‘‘It can’t be absolutely binding because we can’t absolutely bind ourselves to the outcome of the consultation process but we’ve gone as far as we can reasonably go, I think,’’ McKenzie said.
‘‘There are agreements that will drop into place depending on the outcome of the consultation.’’
WIL strategic adviser John Palmer said the project had many advantages for the community, including the agreement by all parties to ensure water would be available for the next 100 years.
‘‘For more than a decade, we have worked toward this scheme,’’ Palmer said. ‘‘Now, we’ve made a very significant step with agreement between council, irrigators and central government on a funding model that is fair to all stakeholders.’’
WIL had ‘‘a job to do and I expect to reach our goal to raise $15m’’.
TDC plans to open public consultation on October 21 over its funding and governance models for the dam. WIL aims to release its product disclosure statement to potential shareholders in November.