How we reach the price for water – Tas Irrigation

Tasmanian Irrigation Pty Ltd (TI), the state-owned company responsible for developing Tasmania’s most recent irrigation schemes, today explained its pricing structure in light of potential misconceptions in the far north-west farming community.

In the normal course, the State Government asks TI to investigate the feasibility of irrigation schemes proposed by local farmers that will have a net positive economic benefit for the state but which require a level of initial government funding to make them financially possible for the farmers.

TI chief executive Chris Oldfield said TI was aware that some critics of its proposed Duck River scheme at Circular Head claim that the $1200 per megalitre (ML) for water in the scheme is excessive and returns a margin to TI. “This is not the case,” Mr Oldfield said. “In fact, the price has been set consistently with those in other schemes and requires significant public contribution under TI's private-public partnership development model.”

The Duck scheme is the remaining one of three original schemes that farmers had requested Primary Industries Minister Jeremy Rockliff to pursue, through TI, at Circular Head.

“In undertaking this task, we have worked closely with Mr Rockliff and local MP Joan Rylah, who has been a strong advocate for local farmers and for the Duck scheme,” Mr Oldfield said.

“The cost of building the Duck scheme to provide 5000 ML of water is estimated to be $23.7 million, which is $4740 per megalitre.”

Of that $23.7 million, it is proposed that irrigators will contribute $6 million and the Australian and Tasmanian governments the balance of $17.7 million, subject to an approved business case that will be developed in partnership with local irrigators who have already committed to the scheme.

To meet their share of $6 million, irrigators would pay $1200 per megalitre, or about one quarter of the actual costs, for each of the 5000 ML on offer. They pay a 10 per cent deposit of $120/ML and the balance of $1080/ML when the scheme is completed and commissioned two years later.

In real dollar terms, this price is consistent with all schemes that TI has constructed, apart from the South East Stage 3 scheme where $2700 per megalitre was offered.

“In the meantime, TI bears all the financial and environmental risks and the responsibility for community engagement during construction. TI is contractually bound to deliver the volume of water to each nominated delivery point on the farm on time and at the agreed price.”

Mr Oldfield said the price per megalitre in each scheme took into consideration the total capital cost as well as: the potential irrigable land the final use of the water (the value it adds) the prevailing market price of water in similar growing regions alternative water sources that may be available. Several farmers at Circular Head have proposed a private scheme, additional to the Duck scheme and to the west. “If a standalone, private scheme could be developed without the requirement of public funds, TI would not stand in the way, in fact, we would welcome it. This was the case with the privately-developed Macquarie Settlement scheme,” Mr Oldfield said.

At the request of Mr Rockliff, Tasmanian Irrigation has offered assistance to the local proponents to assess the viability of their proposal. “Quite separate to anything else we are doing, TI has some nationally renowned irrigation and engineering experts we can make available to work with them. If these farmers take up the offer for assistance, we’ve been asked to report back within 90 days to enable them to refine and present any proposals and costings to their potential investors without undue delays,” Mr Oldfield said. “So far, they have not accepted the offer but our doors remain open.”

Contact

Chris Oldfield
0419 309 303