7 Feb 2013

Range of investors expected in irrigation schemes

10:08 pm on 7 February 2013

The superannuation fund, ACC and other private equity funds are expected to be among key investors in regional irrigation schemes, partnering with the state and regional councils.

The Government will set up a company to spend an initial $80 million on irrigation projects.

Paul Callow, a Deloitte's partner who specialises in infrastructure and energy, says the Crown-owned company will operate like Crown Fibre Holdings, which was set up for the rollout of ultra-fast broadband.

He says the problem with projects like irrigation is that a very large capital investment is needed when there is an uncertain uptake and the private sector is not usually very enthusiastic about that risk profile.

Mr Callow says Government is putting in some of the money to build the project and then as demand grows it can effectively get its capital repaid by the private sector partner.

He says that allows the Government to recycle its capital and control the rates of return that the private sector earns.

Mr Callow says there is a big community of infrastructure investors that might be interested in this type of infrastructure project.

He says this type of project is likely to be better understood by New Zealand domestic investors than by international investors.