MIL Board announces strategy for financial reset

As announced in July, a full business review of Murray Irrigation (MIL) has found that a reset of the company’s financial model is necessary for MIL to continue delivering water into the footprint for generations to come. 

The review identified that more revenue is needed to restore the deficit in MIL’s annual operating budget, and to gradually build the capital reserves required to invest in infrastructure and technology that lowers the risk of equipment failure, enhances the security of future water delivery and keeps fees as low as possible.

MIL Chair, Noel Baxter, said the business review considered a range of options for achieving financial sustainability. 

“The Board and Management’s first priority has always been on identifying a strategic solution that is in the best interest of the company and its shareholders that will set MIL on a path towards long-term financial stability," Mr Baxter said.

“The review process considered fees and charges and the cost structure of the business. More than 10 different models were developed to test the best path forward for MIL. 

“As MIL Directors, we are obligated to thoroughly consider all solutions to reset the company’s finances. 

"One of the most potentially beneficial models for shareholders, customers and the company was the permanent sale of conveyance entitlements to the Commonwealth Department of Climate Change, Energy, the Environment and Water (DCCEEW). Given its strong potential, we had hoped to put this model before a shareholder vote.”

Under commercial-in-confidence conditions, MIL worked with DCCEEW to obtain a sustainable and economically viable offer from the Commonwealth for up to 30,000ML of permanent conveyance entitlements. 

Following a complex and lengthy negotiation period, DCCEEW made an offer. However, the Board has unanimously rejected this offer, as it believes it is significantly undervalued.

In the wake of this outcome, the Board has subsequently determined that the annual sale of temporary water is the best way to address the company’s long-term financial sustainability and, as such, that a shareholder vote is no longer required. But that does not mean we do not need shareholder partnership.

Management is currently undertaking further work on the details of implementing this decision, based on the annual sale of a volume of company water after operational requirements are met, commencing 1 July 2024. 

“As you can imagine, this work is complex, and we need to make sure we get it right," Mr Baxter said.

"We also want to ensure that shareholders and customers have the opportunity to understand the detail and discuss what this decision will mean for them.” 

To this end, MIL will host three customer information sessions on 13 and 14 September in Deniliquin, Finley and Barham.

All customers will receive an invitation with information about times and venues, and will be asked to register their attendance at a preferred session. 

The Board understands that since sharing MIL’s financial analysis of its operating deficit in July, misinformation has been generated by various parties regarding the company’s financial stability, processes, and fees and charges. 

"Information that is being spread by external commentators is not informed by the detailed analysis and policy discussions that have been undertaken by MIL, and is therefore based on speculation," Mr Baxter said.

“This is the first time MIL has conducted a comprehensive review of the business that has a long-term generational focus to secure water delivery into the future. 

“While we understand that the review findings and the Board’s agreed strategy to reset the company’s finances and secure water delivery into the future will come with challenges, doing nothing is not viable or a smart option.

“I encourage shareholders and customers to attend our September meetings to obtain accurate information, and to hear directly from MIL how we plan to reset the company’s finances and secure water delivery into the future. 

“The Board and Management are committed to rectifying the revenue shortfall and look forward to discussing how we do this with shareholders and customers in September.” 

For any questions, please call 1300 138 265 or email review@murrayirrigation.com.au

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Media Contact

Steph Buller

M: 0447486934

E: stephanie.buller@murrayirrigation.com.au