The North Otago Irrigation Company is to make the first repayment on a $10 million loan it got from the Waitaki District Council when its irrigation scheme was built about three years ago.
The company expects to pay the council almost $500,000.
The council decided in 2005 to advance the loan, a controversial decision at the time. Since then, with the interest it had accrued, the loan grew to $12,804,696 at the end of June this year.
The loan was for the company to double the size of its infrastructure so it could provide water for a second stage to irrigate between 10,000ha and 15,000ha, after the first stage of 10,000ha had been developed.
North Otago Irrigation Company (NOIC) chairman Alan McLay told a council meeting yesterday all the shares equating to 10,000ha in the first stage had now been sold.
The scheme, on the North Otago downlands and in the Kakanui and Waiareka Valleys, was now being extended to the second stage.
As farmers buy shares - one share equating to water for 1ha - in the second stage, the loan and the accrued interest will be repaid by NOIC.
Mr McLay said the first extension for stage two had now been completed. It was supplying water for 380ha through the new Paradise Valley line.
The scheme was also being extended south with a pipeline under the Kakanui River to feed a large storage dam which could provide irrigation as far as Waianakarua.
Mr McLay said the council loan had had huge spinoffs for the district and had helped the area weather the economic recession.
That could be attributed partly to irrigation, he said.
However, Mr McLay also said some farmers were "really hurting" and their operations may not survive the recession.
Waitaki Mayor Alex Familton said the repayment was a positive move by NOIC.
"I believe we can all accept, now more than ever, the scheme was a positive and constructive project for the whole community," he said.
