About
The Kurow and Duntroon Irrigation Company Ltd (KDIC) is seeking to update and expand it’s existing irrigation infrastructure. To do so will involve the capital expenditure of $xxxxxx in a new piped scheme which will run from Waitaki Dam to Duntroon.
The project will see the existing canal scheme piped throughout, to provide water on demand through the irrigation season, from September to mid- April each year. Key features of the scheme will be controllability, efficiency of water distribution and an expansion of the command area through pumping, water optimisation and new technologies. Similarly, the design and construction materials will ensure the scheme will exceed the design life of 80 years. The present water race is leaking badly and requires significant investment.
The Company is seeking to raise capital from the sale of additional shares to existing shareholders and near neighbours who wish to benefit from an expanded command area, which will rise from 2000 ha to 6000 ha. All shareholders will be wet, on a one share per ha basis.
It is intended that once finance and shareholder approval have been concluded, that the Company will engage contractors to commence work in February or March 2017. It is expected that the project will take up to 14 months to complete.
Community Based
KDIC is a community based scheme, which originated in 1965 when the existing canal scheme was installed by the Ministry of Works, working with the local farming community to bring water to 1600 ha, from the Waitaki dam, in an open water race.
The scheme was limited, by the siphon at the dam, the unlined water race and physical geography which meant that the wider agricultural potential was beyond the technology of the time. Effectively the height of the canal, as it contoured through the area, became the high point for irrigation. Almost all farmers installed flood irrigation, and a system of by-washes and strict rostering ensured that water was managed as effectively as possible.
An extension of the scheme was established in 1971 when a pump was installed at Waikaura to lift water into a new canal that ran to Duntroon via Racecourse Road. This pump station remained the only one on the scheme. An additional 400ha of irrigated land was added to the scheme. Since then the scheme has remained the same size, with 58 shareholders presently owning shares in the scheme, on a one share per hectare basis. There are no dry shares.
The scheme passed into community ownership in 1989 when the Upper Waitaki Irrigation Company was formed, and acquired the scheme for $1 from MOW. The recent name change to KDIC occurred in 2015 to avoid confusion with water irrigators in the Upper Waitaki catchment above Waitaki Dam.
Significant Change
From 1965 to the present the agricultural scene in the area has gone through significant change. Orchards, dry land farming and forestry have given way to pastoral activities like dairying, dairy followers, beef and sheep. Dairy is now the predominant land use industry, conversions have been ongoing since 2002 and reached a peak in 2014. Demand for an additional command area has been driven by new entrants and established business alike.
Vineyards have been established in several locations and the availability of water has enabled growers to frost fight. Orchardists remain, with apricots, plums and nectarines grown at Waitaki Orchards for over 40 years.
The application of water has also changed, with spray irrigation largely associated with dairy units, the overall use of flood irrigation has diminished to less than 40% of all units. There is still a strong core of flood irrigators which is recognised in the ECAN Resource Consent, but long term these methods will be superseded by new techniques, due to water efficiency savings and good management practice and the likely adoption of Plan Change 5 relating to nitrate losses.
Ongoing scheme development has been one of maintenance with several sections of water race lined with PE liners to reduce water loss. This has been a sticking plaster approach because the measured loss of water between Dam and paddock exceeds acceptable levels. The water race was never fully lined, with MOW relying on silts to naturally seal the earthworks. The combination of soils and rock type contain little clay content which would be effective in other areas.
Careful Consideration
The Company have been considering the asset for some years, being fully aware that ECAN were concerned at water wastage and that the scheme is/was so inflexible in use. In 2015 the Board crystallised the earlier work and commenced the project to establish and upgrade and expansion. Simply put, the expanded area would aid the funding though share sales and effectively improve the cost per ha for development.
The Company sought Expressions of Interest from existing shareholders and neighbouring owners seeking a reliable source of water. These included an initial contribution of $20 per share from a total of $50 per share to pay for feasibility studies. In addition, applicants were also asked to agree to enter Easements to facilitate access. Supported by a positive response the Company embarked on the project on a stage by stage basis.
The concept of a wider scheme command area was straightforward, up to 4000 ha above the existing water race is suitable for irrigation. If the Company were to invest in upgrading the water race or piping the scheme, then it was considered important to cast the net as far as practical. The Company was advised on a procurement strategy that included the specimen design and contractor selection/pricing of the construction project.
Construction
GHD are the retained engineers. The Company would seek a design and build contract, where the construction companies could use their expertise to improve on the specimen design to produce an affordable and cost effective scheme. The Company has run a competitive tender to establish who should work with GHD on an Early Contractor Involvement (ECI) basis toward the design and built contract.
It is likely that the ECI process will be completed in December, pending contract award in 2017. The Company will launch it’s PDS in late October to secure the capital funding required to meet the minimum lending/capital threshold.
Resource Consent
The Company holds a resource consent from Ecan that expires in 2048, for 26.3 million litres. Additional water to supply the wider command area has been secured from the Mackenzie Irrigation Co. Acceptance and payment will be subject to conditions and approval from KDIC shareholders.
As a community scheme the shareholders will be voting on the total project, with a 75% mandate required to ensure that the project proceeds. In turn, providing the vote is successful, the shareholders will then confirm approval to purchase 1600 shares in MIC, borrow such funds as are required to undertake the scheme and approval to sell the shares requested during the PDS process.
