SDRC’s “factsheet”? I’d give it a D minus

In my earlier blog of 26 September on Council’s long-awaited factsheet on Emu Swamp Dam, I suggested that there might have been a link between approving the factsheet on Wednesday, ahead of GBIP’s update meeting with its investors on Thursday.  Council has advised that this is not correct, and that there was “no great alignment with tender closing” and production of the factsheet by Council.  I thank SDRC for its prompt clarification of this point. 

The question remains as to when Council and ratepayers will be provided with an update from GBIP given that tenders for both the pipeline and the dam itself are now closed?  There must now be a very good chance that the factsheet is already out-of-date, even before it’s sent to ratepayers. 

And it remains the case that the factsheet doesn’t answer any of the questions POW! has raised about the significant legal and financial risks to SDRC of investing in Emu Swamp Dam.

 Interestingly, the communication from Council did not offer any correction or answer to the issue of cost overruns as per my earlier blog and as set out below.

SDRC says that "There is no pro rata increase in Council's CAPITAL COSTS if the project cost increases.  Council, as a customer, is paying the same amount as the irrigators per ML".  I’ve highlighted for you the key words here.  Because irrigators are in fact at risk of cost overruns being passed on through the annual charges, according to GBIP’s Information Memorandum at page 27 which states:

“(Cost Escalation): There is a risk that the Scheme could experience cost overruns prior to, or during, construction of the Water Infrastructure. This may impact on the ability to deliver the Scheme, or an increase in Charges going forward relative to initial expectations.”

Whether cost overruns are paid upfront (as capital) or through annual charges is not important to ratepayers.  What is important is whether SDRC is on the hook to pay cost overruns AT ALL.  Unless Council negotiates a different deal to the irrigators then, like irrigators, it will have to pay cost overruns through increased annual charges as set out in GBIP’s Water Sales Documents. 

It’s more important than ever that Council provide information to ratepayers about the potential risks to SDRC of participating in the project, and how those risks are going to be managed.  This factsheet gives us no answers.