Dodgy Council’s dodgy numbers for the dodgy dam exposed

The Hawkes Bay Regional Council are dodgy as dodgy can be.

An economist has poured cold water on their claims of break even for the dam:

Hawke’s Bay Regional Investment Company’s announcement that the Ruataniwha dam was cash flow positive was “factually incorrect and grossly misleading”, an economist claims.

Last month the HBRIC reported to its owner, the Hawke’s Bay Regional Council, that it had enough water users signed up to make the scheme “cash positive”, with the investment company signing more than 42 million m3 of water. The company’s target was 45 million m3 of water.

Economist Peter Fraser disagreed, saying 45 million m3 of contracted water volumes did not achieve financial break-even.

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“It is my professional opinion HBRIC’s claim that 45m m3 of contracted water volumes represents ‘financial break-even’ for the RWSS is both factually incorrect and grossly misleading,” Mr Fraser said.

“Given the revised RWSS has a higher construction cost ($333 million rather than $275 million) it necessarily follows that the financial close number should be revised also – and HBRIC have not done that.

“For transparency and governance purposes, this needs to be rectified as a matter of urgency.”

If the HBRC was a company there would be people sitting in small rooms with their legal counsel being questioned about the claims being made.

Hawke’s Bay Today ran its own calculations (above) using the figures issued to the public by HBRIC.

These figures found that a total of 87.6 million m3 of water would be needed to break even – that is, to cover running costs and loan interest repayments, but also to deliver the return of investment of 6 per cent required by the regional council.

As the current figures stand, the project will run at a forecasted $2.085 million yearly loss for the first five years and a $1.19 million loss from 2024 onwards, presuming no more water has been sold.

Mr Fraser looked over the numbers and said while he got similar figures in his breakdown, he believed the above numbers were conservative.

“The problem is while we don’t know their model, this isn’t very hard and we already know the key numbers – and the math doesn’t lie,” he said.

Mr Newman was asked for a copy of the model HBRIC was using but declined to provide one, saying “this remains commercially confidential to financiers”.

“In regards to the financial model however, Deloitte has had access to it under confidentiality so as to be able to undertake its work,” he said.

Sneaky, furtive, and devious. These guys need to realise that it is the ratepayers funding this dam, secrecy is not an option. The full model the HBRC is using needs to be released forthwith because it is clear that their model is different from the numbers they’ve handed out to everyone else.

If HBRIC has made the number available before why not now? But it is still clear that the dam never made money and now it is 50% more expensive it will never make money.

The dodgy council needs rinsing. Come October there may well be new people at the table. Then we might get some answers.

 

– HB Today


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story.  And when he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet.   Cam Slater doesn’t do quiet, and as a result he is a polarising, controversial but highly effective journalist that takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him.  But you can’t ignore him.

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