Dodgy Socialist Dam having its dodgy numbers reviewed

The dodgy Hawkes Bay Regional Council is really trying hard to ram their dodgy dam through before the council makeup changes.

Finally, the council is getting an independent auditor to look at their dodgy numbers, but already there appears to be a $2 million hole to fill.

The Ruataniwha Water Storage Scheme’s financial viability will be re-examined by independent auditors after concerns were raised by some Hawke’s Bay Regional councillors last week.

Following an extraordinary Hawke’s Bay Regional council meeting on Friday, council authorised a drawdown of $80million, less development costs, for investment in the scheme.

Council had agreed that three of four conditions required before investment could proceed had been met, and an independent financial review from auditors Deloittes supported the content and conclusions of the business case as being robust.

However yesterday, Hawke’s Bay Regional Council chairman Fenton Wilson confirmed Deloittes will be re-checking the figures provided by the Hawke’s Bay Regional Investment Company Ltd (HBRIC).  

He said Deloittes were maintaining the break even point for the project was to be water uptake volume of 41.5 million cubic metres.

Signed water uptake sits at more than 42 million cubic metres.

During Friday’s meeting, councillors raised concerns about these figures – which they had not been presented with.

Yesterday, councillor Peter Beaven said there appeared to be a significant gap between how much would be earned by the water already contracted, and running costs of the scheme.

“Looking at the straight numbers, it appears to me that there is a $2 million cash flow hole,” he said.

For the scheme to reach break even, he said it appeared assumptions were made about a “not insignificant” number of water “spot sales”, which had not been reported in the meeting.

Fenton Wilson thinks it isn’t a big deal. I wonder if he runs his farm finances like that?

As I have always said the dam business plan was based on heroic numbers.

Those numbers can only be worse considering the dam has to be significantly lower and hence have a lower capacity because of the stupid decision of the council to try and convert some DOC land for the dam. If the numbers didn’t work then they sure as hell won’t work now.

Hawkes Bay voters should reject any councillor supporting the dodgy socialist dam.

 

-HB Today

  • Peter

    Very good idea to have an independent review. Hopefully this will draw a line under or through the project and either have the thing move forward or end so that alternative options can proceed.
    I myself prefer a network of retention dam installations as there will likely be a lot more business for me. Whether that is a good option for the region I am not so sure.

  • biscuit barrel

    So they are still fudging the numbers, now indroducing ‘spot’ sales as guaranteed ?
    Does the water uptake that signed up include the HBRC itself acting as a ‘water broker’ and buying the water that once ran free back from itself?

  • Peter

    I wonder how many business would have got off the ground if they also had to have sufficient guaranteed sales to be profitable before they could proceed. I have attached an image of a product life cycle that we learned at school.
    All Ruataniwha would need is enough early uptakers to show viability. All it needs to do is show once it is up and running that it will yield a net return for the country.

    https://uploads.disquscdn.com/images/e77c8337f776d8383e80cb1753fd75fdd683b4e5c8f72dc4b1ac51f8e4c5a8a1.jpg

    • biscuit barrel

      The signed minimum water uptake still requires public subsidy- they like your graph are expecting a lot more for it to require continuing .
      Their slide show -2015-says 45m m3 minimum. They seem to fudged the numbers when they say they have 41.4m m3 which has reached a new lower minimum.
      Slide 18. http://www.hbrc.govt.nz/assets/Document-Library/RWSS-Documents/Ruataniwha-slides-6-August-public-meeting.pdf

      They seem to say they are in ‘negotiation’ for a total of nearly 60m m3 and some other assumptions say 100m m3
      Slide 13
      Project cost of $275m;
      – 75% bank debt, 25% private sector
      investment;
      – Interest rate of 6.5%;
      – Equity return target 16.0%
      – Water charge of 26c/m3
      ;
      – 104* million m3 contracts sold; and
      – Generation, spot sales and operating costs
      as per the Deloitte Report

      No sign of the ‘investors’ yet ?

      The HBRIC which is running the project has had its ‘statement of intent’ updated so it can ‘borrow to pay the interest’ on the Councils $80 mill investemnt.
      Thats how sure they are that it makes ‘sense’

      • Peter

        Yes well I guess a lot of people including the investor are waiting for all the noise (F&B F&G Iwi) to settle before committing…..I will be interested to see what happens when the court cases finish…quite a lot I imagine.

  • F T Bear

    I welcome another independent audit if that’s what it takes to see the thing move or not. It’s the only way it will appease the opponents if it does go ahead.
    As I understand it the dam height isn’t yet confirmed.
    And I still don’t see that a 150 hectare increase in conservation estate is a bad thing .
    I have voted and only voted for people who supported the project

    • biscuit barrel

      The Supreme court has ruled that taking the conservation land and doing a swap ‘is a bad thing’ or in other words is illegal.
      Voting for people is fine, can the rest get you pay their share on the rates as well. Its at least $80 mill and likely to climb.

      • F T Bear

        Hopefully the decision will be overturned on appeal or the Govt will change the rules.
        I don’t want to pay ever-bodies share of the rates. I am happy enough paying my share, just as i am happy to pay my share of flood protection maintenance, park development and maintenance, Peka Peka swamp restoration, bike trails and any other things they involve them selves in, including business development. Most of which I might never use personally.
        It’s just like paying my share of the Police , CYPs, Courts, or any other govt, department that I don’t like or never use.

        • biscuit barrel

          Supreme Court is end of the road. Government can change the rules for those that come after, but overturn a specific court case and a specific piece of land already decided. ? Thats practically impossible. They would have to move the dam and flood another piece of conservation land for that to work.

        • biscuit barrel

          As for paying for things that benefit the whole community is a huge difference to the whole Hawkes Bay pays to improve land value for some 150 land owners.
          Other projects usually have enough private and outside investors to pay without getting the ratepayers wallets rifled first

          • F T Bear

            It’s not just the 150 farmers who might benefit , what about the people I work with who will mostly benefit as well.

          • biscuit barrel

            Will the farmers have a covenant on their title so any increase in value ‘goes back to the community’ , who are paying for it.

          • F T Bear

            Why would they, next you will be asking me to have a covenant on my title for the increase in value to go back to the community.
            It’s good luck to them if the value of their property goes up, just as it was for people who lived in flood prone land that is now protected by publicly funded stop banks.

  • WaterGirl
    • biscuit barrel

      Thats interesting
      “A chap who has spent his life doing exactly this work – removing shingle from behind dams – tells me the minimum cost for dredging (in relatively deep water, at the dam face) is $50/m3, up to around $100.”

    • F T Bear

      And we are all falling over ourselves to believe what Bruce Bissett says is gospel.
      I know a chap who says he can predict the weather, that doesn’t make it right.

      • biscuit barrel

        So who else has different figures ? The reality is no one has challenged the numbers given.

    • F T Bear

      Perhaps a better article to highlight might have been the letter to the editor from John Thompson on the opposite page of the paper.

      • WaterGirl

        I haven’t got a link for that can you put it up?

        • F T Bear

          I’m sorry , putting up the links is beyond my technical abilities, I wish I could but my daughter just doesn’t have the patience.

  • Dumrse

    What’s the chance we can see the list of Councillors supporting the dam again ?

    • F T Bear

      For those that have the vote the information is freely avalable.

      • Dumrse

        Thanks for the prompt. I searched dam supporters at the bottom of the page and, bless WO, all the answers were there. Three dodgy supporters did not get my vote.

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