A North Otago irrigation scheme is confident it will not face the slow payment problem bedevilling its northern neighbour – the Hunter Downs Irrigation Scheme Ltd.
Late last week, Hunter Downs Irrigation Scheme Ltd chairman Andrew Fraser said the company has received payment for about 60% of shares but some farmers had scaled back their investment, threatening the future of the $375 million scheme.
North Otago Irrigation Company (NOIC) chief executive Robyn Wells said, compared to the Hunter Downs scheme, NOIC’s was based on a different model and at a different stage.
“We’re at the point where we are proceeding with our construction. We’re at different points and it’s a bit of a different structure.
“In terms of the way we structured our capital-raise, we had our shareholders put 10% of the share price on share application. If they didn’t do that, we wouldn’t accept their application. Fifty per cent has to be paid this September but we don’t expect to have any issues with that.”
The NOIC scheme covers more than 10,000ha and, in October last year, NOIC offered farmers the chance to buy shares in its expansion project, which will cover a further 10,000ha.
Mrs Wells said about 100 applications had come in and the company had already raised more than the $14 million minimum it needed to proceed.
By contrast, Hunter Downs’ Fraser said farmers who had payments outstanding had unfairly disadvantaged the shareholders who did meet the investment deadline of March 31.
“As many irrigation schemes in the past experienced, we’ve had a high proportion of support voiced but getting payments in is the hard part. We know there’s a lot of financial pressure out there but we can only bridge the gap so far. If there is not demonstrable grassroots support, as evidenced by payments within the next week, we may not be able to build the scheme which would be a huge blow for the region.”
Mr Fraser urged shareholders to pay up to enable feasibility studies into the scheme, which would cover about 32,000ha, to continue.
Shareholders who have not paid by May 1 could forfeit their shares.
“This is a critical time for Hunter Downs Irrigation Ltd as we need to create certainty for our future. Are we building a scheme or not and if so do we need to reduce scale? Hunter Downs Irrigation is the only option we have to get water but well need a critical mass of farmers to make it happen,” said Mr Fraser.