As reported by RNZ, it was announced on Monday that “the final cost of the controversial [Waimea] dam is $211 million, double the $104.5 million projected cost when the Tasman District Council voted to go ahead with the project in 2018, and nearly three times the $75.9 million price it consulted on in 2017.”
That’s the kind of cost escalation Hawke’s Bay can expect if the failed Ruataniwha Dam in Central Hawke’s Bay, which aims to hold eight times as much water, is resurrected.
That dam, floated ten years ago, had a cost at the time of over $600 million – about $330 million to construct the dam and an equivalent amount for the infrastructure to deliver the water to users. The same project today – Ruataniwha Dam 2 – would easily exceed $1 billion.
Proponents of Dam 2 expect that the Government’s fast track process will wash away the environmental concerns about the original project. Leaving that debate aside for another day, the Waimea announcement should focus attention on a more deadly threat to Dam 2 – its financial fantasy.
The potential water user/payer pool for Dam 1 was about 400-500 CHB irrigators, plus CHB Council as a municipal user. Fewer than 200 were cajoled over three years into signing purchase intent agreements … the project as dying a financial death. Now, with a billion dollar direct cost, plus let’s say 7% or $70 million annually as a financing cost, does anyone seriously imagine CHB water users footing that bill?!
Unlike Dam 1, where HBRC ratepayers were expected to bear the interest costs for over a decade, Dam 2 proponents assert that no public money will be involved in constructing the scheme. However, they are more cagey about who should pay for so-called ‘environmental flows’ – that is, releasing public river water for its natural ecological purposes after it has been impounded for private irrigator use! First they take it from us, then they charge us to return it.
If Dam 2 proceeds, expect that bill – for water naturally free-flowing in the public domain – to come to ratepayers. If I have that wrong, I challenge Dam 2 proponents to set the record straight … in writing.
Meantime, hang on to your wallets, Hawke’s Bay ratepayers!
To increase the ‘user/payer pool’ for Dam 2 (and in theory build a broader political base of support), its proponents are floating the idea of piping water from the lower Tukituki (below the Red Bridge) to Whakatu, where it might find industrial users. So far, I haven’t heard anyone on the Heretaunga Plains saying, ‘Count me in on that one!’
To the contrary, for water security on the Heretaunga Plains, water users are formulating their own water management plans, whose merits will need to be assessed separately in due course.
Water security is one thing, water fantasy is another. Watch this space.
This whole project is based on hope, dreams, fantasies, greed, and downright lies. Even those with absolutely no expertise in these matters must be able to see the fallacies surrounding the whole operation. Fast tracking this is a rort put up by the current Government to support their cronies in business and has no concern for the ratepayers of Hawke’s Bay – who are already suffering under the constant price rises, and fees and taxes, constantly appearing from the Beehive. For heavens sake proponents of this scheme – pay for it yourselves if it’s that wonderful, and leave the population, and their wallets, alone
Many of the proponents of the original Dam 1 were financially illiterate, as illustrated by the comments in John Palaire’s report on the viability of the project in 2017. He described the financials as “unorthodox”. Phew, that is putting it mildly. Proponents were clearly confused about the meaning of “Breakeven”, and were completely hoodwinked by the consultants engaged by HBRIC into believing that the scheme would result in positive earnings for investors. Mr Palairet showed that this was completely incorrect. Indeed, it was more like a “Ponzi” scheme, where the HBRC was required to continue to borrow money for 30 years just to ensure that adequate rates of return were available to commercial investors.
What has changed with Dam 2? Likely, costs have doubled. Where is the required capital going to come from? Where is the financial analysis, and a comprehensive risk assessment?
Some of the financially illiterate proponents are still involved. Have they not learned anything in the intervening 7 or 8 years?
Even though I no longer live in Tamatea, I still maintain a keen interest in the shenanigans of the proponents for RWSS 2. Right now I’m not too concerned that their V2 scheme stacks up at all, unless they manage to persuade potential investors with some very creative accounting. Regrettably, ideology trumps accounting in this case, so I won’t be surprised if either ACC or the Super Fund are “persuaded” to invest in it, never mind ACC’s $7 billion deficit. Another point of note is that the consents lapse this year – wonder if they’ll manage to get going on the project before that happens, but then I don’t expect that minor detail to stand in the way of “progress”. The environment will, likewise, just be a minor inconvenience. Methinks should this scheme get any real traction, a nationwide protest and plan of action similar to what stopped logging in Pureora should be considered. We need to start thinking about this now.