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Preliminary Business Case HUGHENDEN IRRIGATION PROJECT CORPORATION PTY LTD Preliminary Business Case Hughenden Irrigation Project Volume One – Study Report FEBRUARY 2020 HUGHENDEN IRRIGATION PROJECT CORPORATION PTY LTD PRELIMINARY BUSINESS CASE DISCLAIMER This report has been prepared on behalf of and for the use of Hughenden Irrigation Project Corporation Pty Ltd and the Australian Government and is subject to and issued in accordance with Hughenden Irrigation Project Corporation Pty Ltd instruction to Engeny Water Management (Engeny). Engeny accepts no liability or responsibility for any use of or reliance upon this report by any third party. JOB NO. AND PROJECT NAME: M7220_003 HIP Preliminary Business Case DOC PATH FILE: M:\Projects\M7000_Miscellaneous Clients\M7220_002 HIP Prelim Business Case\07 Deliv\Docs\Report\Revs\Master Report\M7220_003-REP-001-0 Prelim Business Case - Master Report.docx REV DESCRIPTION AUTHOR REVIEWER PROJECT APPROVER / DATE MANAGER PROJECT DIRECTOR Rev 0 Client Issue Jim Pruss Andrew Vitale Andrew Vitale Aaron Hallgath 14 February 2020 Signatures M7220_003-REP-001 Page ii Rev 0 : 14 February 2020 HUGHENDEN IRRIGATION PROJECT CORPORATION PTY LTD PRELIMINARY BUSINESS CASE CONTENTS CONTENTS III APPENDICES XI LIST OF TABLES .............................................................................................................. XII LIST OF FIGURES ............................................................................................................ XV 1. EXECUTIVE SUMMARY ......................................................................................... 1 1.1 Setting the Scene .................................................................................................... 1 1.2 The Importance of the Hughenden Irrigation Project ................................................ 1 1.3 Outline and Background .......................................................................................... 2 1.4 Service Need and Base Case .................................................................................. 3 1.5 Governance and Risk .............................................................................................. 4 1.6 Advantages and Opportunities ................................................................................. 5 1.7 Risks and Unknowns ............................................................................................... 6 1.8 Approach ................................................................................................................. 8 1.9 Reference Project .................................................................................................... 9 1.9.1 Key Metrics ..................................................................................... 10 1.9.2 Constructed Assets Required ......................................................... 11 1.10 Water and Environment ......................................................................................... 11 1.10.1 Water Sources and Allocation ......................................................... 11 1.10.2 Groundwater ................................................................................... 11 1.10.3 Access to Unallocated Water .......................................................... 12 1.10.4 Current Volumes Available for Allocation ........................................ 13 1.11 Environmental Flow Objectives (EFOs).................................................................. 13 1.12 Environmental, Planning, Social and Cultural ........................................................ 15 1.13 Capital Cost Summary ........................................................................................... 16 1.14 Revenue Summary ................................................................................................ 17 1.14.1 Crop Selection ................................................................................ 17 1.14.2 Gross Margin Analysis .................................................................... 19 1.15 Economic Analysis ................................................................................................. 20 1.15.1 CBA Results ................................................................................... 20 1.15.2 Economic Contribution Analysis Results ......................................... 20 1.16 Financial Assessment ............................................................................................ 21 1.17 Affordability ............................................................................................................ 22 M7220_003-REP-001 Page iii Rev 0 : 14 February 2020 HUGHENDEN IRRIGATION PROJECT CORPORATION PTY LTD PRELIMINARY BUSINESS CASE 1.18 Proposed Capital/Government Contribution ........................................................... 23 1.19 Conclusions ........................................................................................................... 25 1.20 Recommendations ................................................................................................. 26 2. GOVERNANCE ..................................................................................................... 28 2.1 Key Points ............................................................................................................. 28 2.2 Background and Purpose ...................................................................................... 28 2.3 Role of the Australian Government ........................................................................ 29 2.4 Role of the State Government ................................................................................ 29 2.5 Role of the Project Owner ...................................................................................... 30 3. METHODOLOGY .................................................................................................. 31 3.1 Key Points ............................................................................................................. 31 3.2 Background and Purpose ...................................................................................... 31 3.3 Approach ............................................................................................................... 31 3.4 Summary Risks ...................................................................................................... 32 3.5 Risk Assessment and Treatment ........................................................................... 33 4. STAKEHOLDER ENGAGEMENT .......................................................................... 35 4.1 Key Points ............................................................................................................. 35 4.2 Purpose and Objectives ......................................................................................... 35 4.3 Limitations and Risks ............................................................................................. 35 4.4 Stakeholder Analysis ............................................................................................. 36 5. PROPOSAL BACKGROUND ................................................................................. 38 5.1 Project Location ..................................................................................................... 38 5.2 Economic Overview - Key Points ........................................................................... 39 5.3 Industry .................................................................................................................. 39 5.3.1 Employment .................................................................................... 39 5.3.2 Agricultural Production .................................................................... 40 5.3.3 Mining ............................................................................................. 41 5.3.4 Business ......................................................................................... 41 5.3.5 Services to Transport ...................................................................... 42 5.4 Local and Visitor Services ...................................................................................... 42 5.4.1 Hughenden Aerodrome................................................................... 42 5.4.2 Schools ........................................................................................... 42 5.4.3 Health ............................................................................................. 43 M7220_003-REP-001 Page iv Rev 0 : 14 February 2020 HUGHENDEN IRRIGATION PROJECT CORPORATION PTY LTD PRELIMINARY BUSINESS CASE 5.4.4 Diggers Entertainment Centre......................................................... 43 5.4.5 Flinders Discovery Centre ............................................................... 43 5.4.6 Visitor Accommodation ................................................................... 43 5.5 Current/Recent Developments ............................................................................... 43 5.5.1 Hughenden Recreational Lake ........................................................ 43 5.5.2 Kennedy Energy Park ..................................................................... 44 5.5.3 Overland Sun Farm ........................................................................ 44 6. SERVICE NEED .................................................................................................... 45 6.1 Key Points ............................................................................................................
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