Crown Irrigation considers further irrigation investments
Crown Irrigation Investments, set up as a bridging financier for irrigation schemes, says it is keen to be part of the second stage of Canterbury's Central Plains Water.
The Crown entity, set up in July 2013 and run by former AMP Capital Investors chief Murray Gribben, invested $6.5 million in the first stage of Central Plains Water in 2014, in its first investment. Stage one is being built and planning is under way for stage two with a view to raising capital next year.
Gribben says he expects funding for stage two to be sought in the first quarter of 2016 and Crown Irrigation has already been in talks with Central Plains Water about further investment. "We would fully expect to be an investor in stage two."
Crown Irrigation's annual report says its participation in stage one provided greater certainty to the scheme and facilitated private debt investment.
"This is evidenced in the final capital structure for the scheme, which saw the provision of $13.5 million of financing by banks that Crown Irrigation was originally asked to provide," the annual report says. Crown Irrigation has been in direct talks with two schemes and early stage discussions with an additional ten schemes, according to the annual report.
The government has signalled $400 million of investment in irrigation to boost the economy and allocated $80 million in Budget 2013 for Crown Irrigation. Its investments come with the rider that they must not crowd out alternatives, must be the minimum to make a scheme viable and must be on commercial terms, if possible.
There is a separate Irrigation Acceleration Fund that helps projects in their very early stages,
Gribben's comments come after the parliament's primary production committee released a report frowning on the use of farmer cooperatives as a business structure for irrigation schemes and expressing concern "about the risk that intensified dairy farming may prove environmentally challenging". Crown Irrigation leaves environmental issues to regional councils.
The committee, in its annual review of Crown Irrigation, said current farmer co-operative irrigation schemes increased the value of farmland, making it harder for future farmers to afford land. "The Crown's objective is to see water priced so that not too much land value is derived from water for which the farmer has not paid," the report says.
"We are concerned that investment pressures on the Central Plains Water scheme from farmers covered by the scheme being converted to dairying to maximise returns on investment could lead to environmental challenges," the report says.
Gribben said some of the statements in the report did not reflect what Crown Irrigation had advocated to the committee, including that irrigation schemes in Canterbury needed to merge.
"Crown Irrigation consider that it would be optimal if all the existing and proposed irrigation schemes in central Canterbury merged, with a single operating company; this would lead to much more efficient delivery of water in Canterbury," the report said.
Gribben said the schemes can exist in their own right but at an operational level when water was allocated, rather than having five systems across Canterbury allocating water there could be one allocating water for all of them.
Central Plains Water will provide water to an irrigable area of 60,000 hectares between the Southern Alps, State Highway 1 and the Waimakariri and Rakaia Rivers, in the Selwyn-Waihora zone.