Up to $3m cost for dam arbitration

Friday, 13 September 2024

An aerial photograph of the Waimea Community Dam. The dam will be fully operational from September 16 as all consent and Tasman Resource Management Plan (TRMP) requirements related to the dam’s commissioning have now been met.

Preparing for and engaging in the arbitration process between the joint venture contractors of the Waimea Dam and Waimea Water Ltd will cost up to $3 million, according to a council report.

In July it emerged that an adjudicator’s decision in favour of Fulton Hogan and Taylors Contracting, the joint-venture (JV) contractor, was going to hike up the dam’s projected cost to the tune of $8.3m, bringing the total to $206.5m.

Due to a subsequent payment to the contractor, required as a consequence of the disputes process, the dam’s estimated cost to complete is now $207.5m.

In a full Tasman District Council meeting on Thursday, councillor Mark Greening again questioned how much the total amount disputed was.

Council chief financial officer Mike Drummond said the claims from the joint venture had been received, but he was unable to disclose them, as they were subject to confidentiality and further negotiation.

The report noted that the matters covered in the adjudication would be relitigated by Waimea Water in the upcoming arbitration.

The construction contractor JV had presented a series of claims for additional costs, the report said, which were confidential and would likely go to arbitration.

Waimea Water Ltd has until November 1, 2024 to consider the claims and file their response along with their own claims, the report said.

The flow from the dam would support horticulture water takes from bores on the Waimea Plains and also the community water supply bores near Appleby that supply water to the combined Richmond and Nelson water supply network, the council said.

The cost of preparing for, and engaging in the arbitration process was estimated to be up to $3m, and funding for these potential additional costs was being negotiated between the JV partners, and was not included in the $207.5m revised cost to complete.

Loan funding for these potential additional costs was currently being negotiated between the council, WWL, Waimea Irrigators Ltd and Crown Irrigation Investments Ltd.

The joint-venture contractor building the Waimea Dam started adjudication proceedings in February 2022 against council controlled organisation Waimea Water Ltd under the Construction Contracts Act 2002.

Separately, in a statement the council said an important milestone has been reached in the completion of the Waimea Community Dam project, with all consent, and Tasman Resource Management Plan (TRMP) requirements related to the dam’s commissioning now met.

This meant that from Monday, September 16, 2024, the dam was deemed fully operational.

The flow from the dam would support horticulture water takes from bores on the Plains and also the community water supply bores near Appleby that supply water to the combined Richmond and Nelson water supply network.

With a maximum capacity of about 13 million m³, the size of the dam’s reservoir - Te Kurawai o Pūhanga - would mitigate the impact of a drought greater than a 1:50 year event, the council said.