Dam busted?
Updated costs for the proposed Waimea dam have added a whopping $26 million to its bottom line, putting the future of the controversial project in doubt.
‘‘Unless a solution can be found to close the gap, the dam won’t go ahead,’’ Tasman district mayor Richard Kempthorne told a media briefing yesterday. ‘‘There is no doubt this is a major setback and possibly the greatest challenge yet for the project.’’
A long-time supporter of the dam as the best option to augment the water supply for Waimea, Kempthorne said he was ‘‘gutted’’ by the updated figures, which represent a 35 per cent escalation in costs.
The final price for the construction of the proposed dam in the Lee Valley, near Nelson, makes up a big chunk of those higher costs, coming in at just over $68m – about $18m higher than the build estimate of almost $50m.
However, other work streams were still to be finalised ‘‘and we have reason to believe those other costs are likely to be in the order of $8m over estimate’’.
‘‘So, the total cost could be $26m more than the estimate in 2015,’’ Kempthorne said, referring to a council figure of $75.9m in capital costs to complete the project.
Tasman District Council and dam proponent Waimea Irrigators Ltd (WIL) are likely jointventure partners in the project, for which Nelson City Council has also agreed to contribute $5m.
The 2015 build cost estimate has long been presented in TDC documents with a ‘‘P95’’ confidence level, meaning there was 95 per cent confidence the dam would be constructed at or below the estimated cost.
When asked how it could be so far out, Kempthorne said this was a ‘‘really good question’’.
‘‘It’s one at the forefront of my mind,’’ he said. ‘‘We rely on the professional expertise of people giving us advice, and to have it this much different is a real disappointment.’’
Kempthorne said he was not thinking of seeking redress.
‘‘I think it’s just the reality – it is what it is, we’ve got it now,’’ he said. ‘‘It’s extremely disappointing, but that’s the reality and I’m not focusing on that – we need to try and bridge the gap.’’
WIL strategic adviser John Palmer said that when the project was assessed in 2015, it was on the basis of an 80 per cent dam design.
‘‘My assessment, having inherited those numbers, on the basis of what we see now is that . . . I don’t think it was anywhere near 80 per cent complete, either in cost or complexity, in relation to the numbers we’ve got today.’’
Palmer said he was ‘‘completely blindsided’’ by the updated figures.
‘‘There has been no indication during the work of the project office, until the prices were released, that a number of this order should be expected.’’
Both Palmer and Kempthorne said the focus now would be on attempting to secure the additional funds.
‘‘We will be exploring all opportunities or possibilities to bridge the gap,’’ the mayor said.
He was a bit coy on what this might involve, but agreed that the Government’s regional development fund might be one avenue. ‘‘I’m sure there will be an approach made.’’
An increased ratepayer contribution was another possibility, Kempthorne said.
‘‘The ratepayers can’t just bridge the whole gap, so there would need to be external funding coming in.’’
Palmer said the possibility of WIL providing extra funding was a ‘‘limited opportunity’’.
‘‘I think it’s challenging for the irrigators,’’ he said. ‘‘We achieved
‘‘Unless a solution can be found to close the gap, the dam won’t go ahead . . . There is no doubt this is a major setback and possibly the greatest challenge yet for the project.’’
Tasman Mayor Richard Kempthorne
what we set out to achieve in raising the money [for WIL’s portion of] the equity, but what that also showed us was that we were very close to the limit of affordability over all of the irrigated area.’’
The time available to bridge the gap is also limited.
Palmer said there was a December 15 deadline in order to secure about $40m in concessionary loans for the project from Crown Irrigation Investments Ltd.
He said he believed that if no agreed or ‘‘well-advanced method of funding the dam’’ was determined by that date, the Crown Irrigation funding would fall away, which was a ‘‘one-off’’ opportunity.
Kempthorne said security of water supply was a global issue as well as a ‘‘very real’’ local issue.
‘‘If we go into having no dam, then the constraints on water in Richmond, Mapua, Brightwater, Redwood Valley, Hope in the dry summer months will be very extreme,’’ he said.
‘‘I am certain that if the dam does not proceed, then it or another equivalent solution will be back on the table again at some point, that it will be more expensive, and that we will have suffered significant economic, environmental and social costs in the meantime.’’
Palmer said there was a challenge ahead but ‘‘effectively tearing up 20 years of work and a whole lot of investment and just saying, ‘Well, it’s not going to work’ is a pretty unpalatable option’’.
‘‘But it’s an option that we may have to face, and we’ve got a very limited amount of time to try to solve this.’’