But a recently released briefing to the Minister for Regional Development Shane Jones, from the Ministry of Business, Innovation and Employment (MBIE), reveals Government officials had concerns for Whakapapa’s commercial success when deciding to give it that final loan.
“The challenges in concluding a viable sale for RAL’s Whakapapa assets suggests that it is not a commercially sustainable business,” the briefing said.
The option of providing no further bailout created “immediate costs to the Crown, [but] it will reduce fiscal risks in the medium to long-term”.
“Despite best efforts to estimate this cost [to the Crown], Cabinet has agreed bridging funding for RAL on four separate occasions. This suggests that there are challenges with accurate forecasting of RAL’s revenue and costs and that RAL’s requirement for financial support could be substantially higher than predicted.”
But the former head of RAL, Dave Mazey, now head of a group called Whakapapa Holdings, said he disagreed.
The group had wavered over whether to bid for possession of the northern ski field, but on Wednesday he said they had submitted an expression of interest.
Mazey said he was confident in its ability to turn a profit, which it had done “on average every year” since he had started with the company 30 years ago.
“There were some years when, for whatever reason, normally something associated with a natural event - eruptions or no snow or whatever - you may not make it [that] year. But, on average, the business makes an operating surplus.”
And they were not the only party to have submitted an expression of interest, he said. While they were not privy to a conclusive list, he said he knew there “have been some”.
“We now wait to see whether we get selected, which could be with other entities or other groups that have expressed their interest, through to a second round ... where you prepare a bid.”
The final decision would lie with MBIE, as it had taken on the ski field’s debt.
The winning company would apply for a concession to operate on the mountain from the Department of Conservation, which would take a minimum of four months.
Mazey said if the process moved at the expected pace, the ski field should have an answer - and a new owner - by December.
The key to its success would be finding ways to de-risk the business, such as using snow machines to produce snow even in warmer weather, and operating the Sky Waka gondola year-round to “flatten out the troughs and hollows”.
- RNZ
