Council wants $8.8m bond to cover Rena

Council lawyer Paul Cooney at the hearing. Photo / File

The trust seeking to leave the Rena on Astrolabe Reef has been asked to pay a bond of $8.8 million by the Bay of Plenty Regional Council.

It was one of the most contentious conditions being considered by the panel hearing the application to leave the wreck on the reef.

Environment consultant Nic Conland, who calculated the size of the bond for the Bay of Plenty Regional Council, said it was based on a worst-case scenario.

The bond acts like an insurance policy, providing financial back-up if the applicant and consent holder, the Astrolabe Community Trust, comprising the Rena's owners and insurers, failed to comply with conditions of its consent. It could also be used to clean up unexpected environmental damage caused by the wreck.

However, the trust's view had been that a bond was not needed. It, instead, offered to sign a Letter of Undertaking, an internationally accepted way of providing security to third parties.

The panel has been asked to levy a bond of $5.9 million for the 10-year duration of the resource consent, plus another $2.9 million for the next 10 years.

Much of Mr Conland's evidence dealt with how he calculated the bond. He concluded it was more comprehensive, transparent and had a "greater degree of natural world diversity" than the applicant's calculations.

He said a bond must provide for an outcome in which there were multiple calls on the fund after a storm. His costings were based on Rena clean-up costs from Cyclone Pam earlier this year.

The council's lawyer Paul Cooney said earlier in the hearing that a Letter of Undertaking was insufficient and a bond was needed if problems arose requiring immediate action, such as the discharges of contaminants into the environment.

He said a bond, in the form of a cash bond or a bank bond, would be easily accessible and available. A Letter of Undertaking was too uncertain for the council as the terms could be disputed by Rena's insurers The Swedish Club.

However a Letter of Undertaking of $5 million enforceable for 20 years was being sought if the front bow section of the Rena needed to be removed from its perch higher up on the reef. The stern section was lying on the side of the reef in deep water.

Mr Conland said technical evidence suggested that the most significant effects from the wreck were likely to happen in the first 15 to 20 years from the grounding.

With last Monday being the fourth anniversary of the Rena grounding, he said the council had accepted that the full suite of consent conditions should apply for 10 years, and that responsibility for contingencies should remain for a further 10 years.

The hearing panel indicated yesterday that its decision would be delivered mid to late December.