The ownership of the Otekaieke water race, which about 75 people use for irrigation, may be transferred by the Waitaki District Council to the Otekaieke Water Company Ltd.
However, before that happens, water users will need to approve the transfer in a binding referendum.
The race does not supply drinking water and the council's water assets manager, Martin Pacey, had no concerns with the proposal, subject to approval from the consumers.
The water company wanted improvements to the race, but the council was not prepared to allocate resources for that. The race also did not naturally fit with the council's business or priorities.
"The proposal will allow the council to focus on piped community drinking water supplies," Mr Pacey said.
A report to the council's assets committee on Tuesday said the water company wanted to invest a considerable amount of capital into the scheme to provide a more reliable water supply.
The system at present has about 10km of open water race. The water comes from a weir in the Otekaieke River above the Kenmore Homestead and shares parts of the Upper Waitaki Irrigation Scheme in its lower reaches.
If the proposal is successful, the water company plans to retain the first 2.5km of open race, build a new dam and bypass system and install a reticulated piped system for irrigation and stock use to all the existing stakeholders over the remaining 7.5km.
All legal fees and costs involved in the referendum and the transfer of ownership would be paid by the water company.
