CIF Project - Hurunui Community Water Development

Grant No: 08/05

Last updated: 22 October 2009

Website: www.hurunuiwater.co.nz

Contact details

Name of Applicant Group: Hurunui Community Water Development Working Group trading as Hurunui Water Project Ltd
Contact person
: Amanda Loeffen
Address
: PO Box 29 031, Fendalton, Christchurch 8540
Telephone 1
: 021 359 049
Email
: amanda@alresources.co.nz

Project details

Status: Finished
CIF funding
: $50,000
Total project funding
: $1,870,000
Proposed start date
: 2008-07
Proposed finish date
: 2009-06
Region
: Canterbury

Final report

Advantages and disadvantages of corporate structures

Project description

Hurunui Water Project is looking to find a water management solution for all water users in the Hurunui District. Given that most of the farming in the district is dry-land farming, and barely efficient, there is a huge cry for more water for irrigation. Run-of-river schemes are already over-allocated in places. Initial studies have shown that there is sufficient water flowing through the Hurunui River at certain times of year to enable a water storage facility to supplement existing needs, while still maintaining environmental flows on the river. This project is seeking to verify that assumption, doing detailed investigative work on the hydrology, topography and ecology, while consulting with the community at large.

The issue/opportunity

The options have been distilled into two viable options:

  1. Controlling the variation in height of Lake Sumner such that it stays within its natural variation range, but that the water is held back to enable extra water to be available for irrigation. This will involve installing a small weir at the outlet of the lake, maybe 2 or 3 metres high.
  2. Building a dam in the South Branch of the Hurunui such that a large water storage lake could be formed upstream of the gorge. The size and height of the dam is not fully established yet, but it could be between 50 and 80 metres high.

The combination of the two options would enable sufficient water to be held to reliably irrigate more than 40,000 hectares of land. Investigations are in process to establish what level of reliability translates to what volume of water.

The context/background

The project is important for the on-going economic and social health of the local community. Much of the area south of the river has been in decline recently, with people moving away to find a better living. Bringing irrigation into an otherwise dry land will provide enormous opportunity for farmers to bring the area back to life, grow new crops and animals, and bring commercial wealth back to the district. Comparisons with the similar Opuha Dam project have been made, suggesting that irrigation could translate to additional commerce worth $120 million per annum.

Methods

Our current efforts are focusing on understanding the water science and the impacts of water storage on the environment in and around the river and lake. Alongside this, we have two other main work streams. One is to find a way to consult with the stakeholders in a meaningful way. We are working on a project with Landcare to introduce a more iterative consultation method as part of our programme. The last, and key, effort for the short term is to work on the governance structure of the eventual organisation that will seek resource consent, and run the project. We have recently been through an in-depth tendering process to find a suitable legal firm to aid in this. It is expected that the structure and future funding routes will be outlined within the next few months.

Project update: June 2009

As a result of considerable research and development of various options, the company has settled on a simple structure that will see the project through the first few years, while the consenting process is still in progress. The important issues that have been resolved are those over the link between funding and access to water. This has been established via the proposed share structure which will allow investors that are in the command area to purchase water right shares once the project has some certainty. In the meantime, any shareholder with ordinary shares will have the benefit of having first option to upgrade their shares to those holding water rights. We will be attracting landowners in the command area as primary investors.

The information memorandum raised sufficient funding to see the project through the recent Water Conservation Order hearings, and also to finish the technical research such that the application for Resource Consent could be made. The application was accepted on 12 June 2009, and the notification process is about to begin.

Once the decision from the Water Conservation Order has been announced, it will be possible to proceed with the next stage of fund raising through the prospectus, which will invite the majority of landowners in the command area to contribute to the scheme, should they have a future need for water for irrigation.


Project update: February 2009

Considerable effort has gone into the project governance over the past 6 months as it has become clear that in order to raise funding, the corporate structure of the company needs to be defined, and the details of the proposed prospectus need to be completely agreed by the existing shareholders. Given that 25% of the shareholding is owned by the farmers and future landowners of the water scheme, it has been prudent to develop a plan that is acceptable to all concerned, and to a level of detail that gives confidence to the future investors.

As a primary step, the project has needed an injection of cash to see it through to the prospectus issue step, and this $1 million is in the process of being raised through an information memorandum, for investment by wealthy individuals, and other parties that are considered to be knowledgeable about the project (mostly the existing shareholders). At this stage, all existing cash investment is being recognized as shares in the future company, in order to give investors some potential to recoup their investment should the project be successful.


Project update: October 2008

The project scope is being defined more clearly as we gather hydrological and ecological data. Although we still have some work to do in terms of consultation with stakeholders, the initial results show that the best solution from a water availability and environmental mitigation perspective will be to use both sites together. This will allow us to be able to manage environmental flows at different times of year to best effect.

Some initial consultation has been piloted using a deliberative multi-criteria evaluation process developed by Landcare. It is planned to widen this to include all key stakeholders in February 2009.

In tandem with the technical and consultation work, we have put a large part of our efforts into securing long term funding, and hence the governance structure for the future organization. This has involved an extensive selection process for the right legal firm to act as advisors. We are currently developing a term sheet to outline the essential aspects of the company structure

 

Last Updated: 13 January 2011

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