Construction of the Waimea Dam has begun. Photo: Tracy Neal RNZ.

Dam cost blows out by $25 million

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The cost of the Waimea Dam has seen a sharp increase, thanks to “unforeseen geological conditions” to the tune of an extra $25 million, bringing the total cost of the project up to $129.4 million.

Waimea Water CEO Mike Scott says that rock designated for use as drainage material in the embankment has become a concern.

“Some rock was found to be more fractured and breaking up more readily than expected.”

The rock in question was originally meant to be used for the drainage zones of the embankment of the dam, but rock testing in January this year has shown this rock is not of a high enough quality to be used.

Mike says that one of the possible solutions will be to import rock from nearby quarries, which will add an estimated $25 million to the project.

“We’ve always been clear that geology was the big risk in this project.”

Ratepayers across the Tasman District may bear the brunt of this additional cost. Under the agreed funding model, that council is committed to funding any cost increases over $3 million.

“This does not automatically mean it’s funded entirely through rates,” says Tasman Mayor Tim King.

He says the council is hoping that other funding partners will look at contributing to the cost increase, referring to partners like Waimea Irrigators Limited, Nelson City Council, and the Government.

The dam is the largest to be built in the country in 20 years and is said by its proponents to be essential to the region’s future.

“We remain committed to this as the best solution to our water shortage needs,” says Tim.

“It’s extremely disappointing to be facing these increased costs. It was always a possibility.”

Tim says the funding need is not immediate, and that the funding that has already been allocated to the dam will last through 2020 and into 2021.

Tim says that the cost increase will be part of a conversation about whether debt caps and rate caps need to increase, and whether other projects are pushed out or altered.

The mayor admitted that if funding could not be found and the council had to fund the entire cost increase of the dam, it would work out to be a 1.9 per cent increase on total rates revenue.

“If there is no other external funding available, ratepayers will be up for another $23.5 million,” says Tim.

“We’ve relied on a lot of external advisors, there have been questions asked about every aspect of this project. The advice provided led the last council to proceed with the project. With hindsight, a greater budget would have been useful. Even with this extra money, it is still the most cost-effective solution.”

Waimea Irrigators Limited, a joint shareholder in the dam, maintains that the dam is still the best solution for the region’s water supply and that they were always aware of the geological risks.

A public meeting will be held in the Richmond Town Hall at 6.30pm on March 31 will be held by Waimea Water.

Anyone interested in attending is asked to register and provide any questions or outline what they would like to hear about by emailing [email protected] by March 27.