Fears over dam costs

Some Tasman councillors fear the $25 million cost blowout for the Waimea dam build may not be the last overrun for the controversial project.

‘‘We now have a new dam price that is about as certain as the old dam price,’’ councillor Mark Greening said.

‘‘The reality is this council is now staring into a dark pit that it cannot see the bottom of.’’

Greening’s comments come after it was revealed last Friday that the forecast build cost of the dam had increased by an estimated $25m to $129.4m.

The rise has been largely attributed to the unsuitability of some rock at the Lee Valley site that was to be used for the embankment. A delay of up to four months for the completion of the dam is also tipped.

Tasman ratepayers are on the hook for $23.5m of that expected hike because under an agreed funding model for the project, any cost overruns above $3m fall to the council alone. Overruns up to $3m are shared equally between the council and its joint-venture partner in the dam project, Waimea Irrigators Ltd.

‘‘Unfortunately, concerns over the Waimea dam funding model and associated contractual arrangements being fundamentally flawed, have now played out,’’ said Greening, who has long raised concerns about the funding model and voted against the project as it was proposed.

Councillor Dean McNamara said he believed the only people surprised by the cost hike were the proponents of the dam. ‘‘I think, the feeling in the community was it was not going to run on time and on budget,’’ McNamara said.

‘‘I am not reassured we have seen the end of the increases.’’

Waimea Water Ltd is responsible for managing the construction, operation and maintenance of the dam. Its chief executive, Mike Scott, said Waimea Water had always been ‘‘open and upfront’’ about the risks around the project, particularly the potential challenges with the geology and topography of the site.

‘‘We always knew the extent of the risk would not be fully understood until excavation and construction was well under way, and risks will persist throughout the period of construction,’’ Scott said.

‘‘Risks will dissipate as construction progresses and as we come out of the ground later in the year.’’

Mayor Tim King on Tuesday said he hoped ‘‘nothing of this significance arises again but I think everyone is pretty clear – until the project is completed, you do not know what the final cost is going to be’’.

Councillor Dana Wensley said it was a long-held concern of hers that extra costs could be unearthed ‘‘once we started digging’’.

‘‘I said it then and I will say it now: we failed to de-risk it for ratepayers.’’

There was ‘‘a lot of pressure’’ from central Government on councillors to approve the project, Wensley said, adding she expected central Government to come through with the extra funding. Wensley said ratepayers ‘‘cannot pay another cent more’’.

Councillor David Ogilvie said the blowout was serious but any effect on rates would not come until 2021-22.

Councillor Kit Maling said the council would look at all avenues to raise the extra money ‘‘with the aim of minimising the effect on ratepayers’’.