Infrastructure that Sask. is handing over to irrigation districts may require $350 million in upgrades and maintenance
The Saskatchewan government is moving ahead with plans to transfer irrigation assets worth hundreds of millions of dollars to a handful of irrigation districts.
Sounds like a good deal, but there’s one catch.
According to an engineer’s report, the assets will require as much $350 million worth of upgrades and maintenance work, a liability that could drown the irrigation districts and their ratepayers under a wave of unwanted debt.
“Right now, the irrigation districts are already responsible for the operation, maintenance and replacement of the infrastructure within their districts, and that’s been (the case) since 1996 …,” said Penny McCall, executive director of the crops and irrigation branch of Saskatchewan Agriculture.
“So, we believe, as government, that the next natural transition is also to allow them to own these assets … because they are most familiar with their assets and they are in the best position to be able to handle them and determine what is needed to keep them running.”
Discussions pertaining to the transfer of provincially owned irrigation assets began in 2009 and have been ongoing since then.
For now, the province would like to transfer about 3,500 irrigation assets to five irrigation districts in the province: the South Saskatchewan River Irrigation District, Luck Lake Irrigation District, Riverhurst, Moon Lake and Northminster.
The proposed transfer would not include assets in the headworks, such as main pump stations, the M1 canal or the Broderick Reservoir, McCall said.
It would include smaller pumps, water lifts, regional canals and buried water pipes.
“It tends to be the smaller infrastructure within the districts that we’re considering transferring.”
McCall said the province recognizes that $350 million is a “huge price tag” that has some irrigators worried.
But the government hopes irrigation districts and their taxpayers will take a long-term view of the transfer, recognizing future opportunities as well as short-term rehabilitation costs.
“Irrigation is certainly a benefit to all of Saskatchewan …,” McCall said.
But “we don’t consider this a core service of government….”
Saskatchewan Agriculture will continue to provide funding to the irrigation districts on a cost-shared basis, as it has in the past.
Since 2009, the Farm and Ranch Water Infrastructure Program (FRWIP), has provided about $30 million to regional irrigation districts in the province, McCall said.
That program is due to expire on March 31 and will likely be replaced by a similar cost-shared program under the new federal-provincial funding framework known as the Canadian Agricultural Partnership.
The province and the irrigation districts have already held meetings to discuss the financial implications of the asset transfer.
In the South Saskatchewan Irrigation District (SSRID), the province has indicated it’s prepared to contribute $43 per acre per year to the SSRID’s infrastructure replacement fund, if the SSRID contributes another $21 per acre per year.
Currently, the SSRID contributes about $4 to $6 per acre per year to the fund.
The difference, as much as $15 per acre, would presumably be generated through SSRID user fees charged to individual irrigators.
“This means it would actually cost us an additional $15 per acre per year to our base rates for us to live up to… this agreement for the next five years,” SSRID chair Murray Kasper wrote in a December letter to taxpayers.
“I do not think this is a good deal.”
Steve Primrose, an irrigator in the SSRID, said a $15 per acre rate increase would cause financial ruin for some irrigators.
He said the Saskatchewan government should cover 100 percent of rehabilitation costs and take a more active role in promoting irrigation.
“You could price yourself out of business with a plan like this,” Primrose said.
“Regardless of what the public is led to believe, farmers, whether they’re drylanding or irrigating, are working on thin margins.”
He said the province should look at water as a valuable resource that can be put to better use.
“We’ve got the biggest body of water in southern Saskatchewan in Lake Diefenbaker. We should be building on that. We should be making our infrastructure better and adding more acres because it does so much for the provincial economy.”
If the Saskatchewan government pushes forward with the transfer, then SSRID taxpayers and board members should be prepared to discuss a motion to shut down the South Saskatchewan Irrigation District, Primrose said.
McCall conceded that the province has received a wide range of comments from irrigators.
Some view the transfer as an opportunity while others are concerned that unmanageable rehabilitation costs will cause unnecessary financial hardship, perhaps even bankruptcy.
Nonetheless, the province is committed. It hopes to have agreements in place with all five districts by the end of 2018.
“We do not want any irrigation districts to go bankrupt because of this…,” McCall said.
“We will not force this…. However, we do have the legislative ability to transfer these assets. We do have the power to do that, but we want this to be agreeable.
“We’re committed to listening to the range of opinions and making (this) successful for everybody.”