Irrigation scheme loan approved

An $8 million loan from the Selwyn District Council means design of stage two of a multi-million dollar irrigation scheme can go ahead.

The council approved the loan to Central Plains Water last month, with the money expected to transfer over next week.

But a community group told RNZ News rate payers should not be lending money to fund a private shareholder scheme.

Stage one of the scheme which takes water from the Rakaia River into a 130km network of pipes, directly to 120 farm gates was turned on in September last year.

Farmer, shareholder Rodney Booth said the scheme had enabled him to transfer his 400ha Hororata dry sheep and beef breeding farm to a fully irrigated finishing farm.

"The feed we are growing is unbelievable, the stock turnover is a lot faster and numbers wise, we are running double what we would normally be at this time of the year and there's still room to move so it's pretty exciting."

Part of the scheme's 17km storage canal runs through Mr Booth's farm.

"Normally at this time of the year we would be getting rid of stock, but we have room to double our numbers, the cattle are putting on between one and two kilograms a day, and our 4000 lambs are gaining 300 grams a day," Mr Booth said.

Mr Booth invested $40,000 into the scheme initially and now pays the rate of $750 per hectare annually.

He said it was a solid investment as it was an assurance he would never go through a drought again.

"That is the beauty of this scheme, we are relying on alpine water, where as some of the down land schemes ... they are relying on east coast rain fall."

Central Plains Water (CPW) chief executive Derek Crombie said since the taps were turned on 47 million cubic metres of water had been used.

He said the focus was now on designing stage two, which would extend the pipes to cover another 40,000 hectares of land.

"The design work is underway for stage two, we plan to have a meeting with shareholders next month to confirm stage two options and then we will prospectus in April and we're hoping to have a contractor appointed and construction underway by the end of the year."

The company is putting $4 million into stage two design, with $3.7 million confirmed from the Ministry of Primary Industries.

But Mr Crombie said the $8 million loan from the Selwyn District Council was vital for stage two to go ahead.

He said final paperwork needed to be signed, but the money should be available next week.

A report presented to the council stated loaning the money would provide significant benefits for the region, but there was little security for the sizeable loan.

"Basically the banks will fund the construction of the work but they don't get involved in the design or what is called pre-construction, so the loan is to get us to a stage where the construction can start and that's when the banks will step in."

Malvern Hills Protection Society spokeswoman Liz Weir said the loan was a bill rate payers should not burdened with.

"If CPW goes belly up then $8 million of rate-payers money will be gone, and what the council will do is put the rates up to compensate for the loss and the interest they would have lost in not investing it in something viable."

She said the loan only benefited the shareholders of the scheme and not the whole community.

The council received 132 submissions on the loan proposal, 72 percent were in favour.

Mr Crombie said there had been strong sales of stage two pre-construction fares, so was certain the loan would be paid back.