Media Release

29 March 2004

Meridian announces stop to Project Aqua

Meridian Energy has today announced it will not continue with Project Aqua, its hydro development project on the Lower Waitaki river.

Meridian chief executive Keith Turner says a combination of circumstances that has emerged means that it is no longer prudent or responsible to continue with the project.

Dr Turner says there are many reasons that have contributed to the decision. No single reason is decisive, but the combination of factors when considered together has led to the decision.

“In essence the decision has been driven by a series of commercial uncertainties which make the risks of continued spending on the project unacceptable.

“Given the huge effort that has gone into pursuing this project by so many people this has been a difficult decision to make. The simple fact is that in the current circumstances, Project Aqua is no longer achievable.”

Dr Turner says among the reasons for making the decision are:

• Decisions made in the High Court last week highlight significant uncertainties around the nature of “water rights”. These are matters of national significance. They will take years to resolve and could materially affect the availability of water in the Upper Waitaki as well as for Aqua.

• It is evident that Aqua cannot now come on stream fast enough to meet electricity demand growth within the next five years. Meridian will now turn its attention to more immediate sources of electricity generation that can become available more quickly.

• Uncertainties concerning the resource consents but in particular: - Whether Meridian would secure a consent - What the conditions of any consent might be - When the consent would be available - How much water the consent would provide

• There is a need to be decisive, particularly for the people of the Waitaki Valley. They have had three years of uncertainty and will face many more years of uncertainty unless a decision is made now.

• The levels of expenditure for this project are substantial. Currently Meridian is investing about $4 million a month to complete preliminary design and comply with consent requirements. The extended consenting timeframe has added to the risks related to these outgoings and they are no longer sustainable.

• Meridian has been advised that, given the uncertainties, financial reporting standards will require all costs to be seen as expenses, and will not be able to be capitalised towards the costs of the project.

• The project is experiencing rapidly growing indirect costs, particularly to service community mitigation, environmental mitigation and irrigation.

• Recently completed geotechnical investigations have provided information that requires design changes for the project, with an adverse impact on project economics.

• The Resource Management Act creates a very difficult process for large projects dependent on water.

“In short, the magnitude of the risks has become sufficient to make it irresponsible to carry on with the project.

“We are required by the Companies Act to be commercially prudent. When we began with Project Aqua we judged the risks to be manageable, but on the basis of what we know now it would not be prudent to carry on.”

“We want to concentrate our efforts on projects that can be deployed more quickly, but we are absolutely committed to finding sustainable solutions for New Zealand’s energy needs.

“We also want to make this decision clear to everyone involved in Aqua, particularly those communities in the Waitaki Valley who have shared with Meridian the uncertainty of the last three years,” Dr Turner said.

ENDS

© Scoop Media