Dam's viability to be re-examined after concerns raised by councillors

Hawke's Bay Regional Council chairman Fenton Wilson confirmed Deloittes will be re-checking the figures provided by the Hawke's Bay Regional Investment Company Ltd.

The Ruataniwha Water Storage Scheme's financial viability will be re-examined by independent auditors after concerns were raised by some Hawke's Bay Regional councillors last week.

Following an extraordinary Hawke's Bay Regional council meeting on Friday, council authorised a drawdown of $80million, less development costs, for investment in the scheme.

Council had agreed that three of four conditions required before investment could proceed had been met, and an independent financial review from auditors Deloittes supported the content and conclusions of the business case as being robust.

However yesterday, Hawke's Bay Regional Council chairman Fenton Wilson confirmed Deloittes will be re-checking the figures provided by the Hawke's Bay Regional Investment Company Ltd (HBRIC).

He said Deloittes were maintaining the break even point for the project was to be water uptake volume of 41.5 million cubic metres.

Signed water uptake sits at more than 42 million cubic metres.

During Friday's meeting, councillors raised concerns about these figures - which they had not been presented with.

Yesterday, councillor Peter Beaven said there appeared to be a significant gap between how much would be earned by the water already contracted, and running costs of the scheme.

"Looking at the straight numbers, it appears to me that there is a $2 million cash flow hole," he said.

For the scheme to reach break even, he said it appeared assumptions were made about a "not insignificant" number of water "spot sales", which had not been reported in the meeting.

Mr Wilson said he did not think the $2 million figure was accurate.

Councillor Rex Graham said he had voted that conditions precedent had not been met on Friday as he had not been able to add the figures of income earned, and costs incurred from the scheme to result in a positive cash flow.

He said some numbers were omitted from the presentation, and every councillor voted without all the information and a poor understanding of all the numbers.

Councillor Rick Barker agreed conditions had been met after seeking assurance from Deloittes that the break even amount was correct.

However he said he was "keen" to receive written proof from Deloittes and HBRIC that the scheme would result in a neutral, or slightly positive cash flow.

On Friday, council heard the scheme's fourth and final condition relating to investment was almost satisfied and would be confirmed in the next few weeks.