The Mokihinui dam would have created a lake 14km long and helped shore up power supply on the West Coast. Photo / Supplied
Meridian Energy has abandoned plans to dam a South Island river partly to remove uncertainty hanging over the partial sale of the state-owned enterprise.
It pulled the plug on its proposed 100MW Mokihinui hydro dam on the West Coast after spending $18 million on development, planning and legal work.
The company faced what could have developed into one of the biggest environmental battles in New Zealand and cost millions of dollars more.
Chief executive Mark Binns said the company was disappointed but political and regulatory uncertainty surrounding the project carried too much risk.
"We know that Labour and the Greens had it in their election manifesto - they are implacably opposed to the project," Binns said.
"We had to look at the political realities, we had to get through an Environment Court case then fight our way through the Conservation Act and all this was undoubtedly going to probably take us through this Parliament to another and introduce political risk."
The timing for a listing of 49 per cent of the $6 billion-plus Meridian has not been released but could be as early as next year.
Binns, who has been in the top job for four months, said he had been asked by the board to review strategy and the status of a number of projects.
"Like any chief executive [if you have] anything that needs cleaning up you're keen to do it in the first six months."
The company was being readied for partial sale and wanted "a clear and crisp outlook" as to where it was going, he said.
"I just had to take a pragmatic business decision on whether it was worth us keeping going and the answer was 'no'," he said.
This year Meridian abandoned plans to build a controversial wind farm in central Otago after spending nearly $9 million and in 2004, it dropped the $1.2 billion Project Aqua scheme on the Waitaki River after spending $95 million.
The 85m-high dam on the Mokihinui River north of Westport would have created a 14km lake and helped shore up power supply on the West Coast where there is no electricity generation.
Opponents welcomed the decision yesterday
"This is a stunning, dynamic and near-pristine landscape and ecosystem," said West Coast Environment Network spokesperson Brian Anderson.
"We are stoked that Meridian Energy has realised that it is simply too precious to dam."
Binns said the economics of the dam continued to stack up, in spite of flat demand for electricity at present. There was a risk that without new projects there could be shortages in future.
"Demand growth is very sluggish but at some point New Zealand will start growing again, it's a question of when and where the power will come from."
Binns said opposition to hydro schemes and the cost of building them made wind plants more viable.
Meridian has consent to build a 60MW wind farm, Mill Creek, near Porirua.