A private agribusiness is seeking to use more than 40,000 megalitres of water each year in arid central Australia to irrigate what it says will be one of the country’s biggest fruit and vegetable operations.

If granted, it would be the single largest private water licence allocation in the Northern Territory, which does not currently have a water pricing regime and does not charge developers for water.

The application, by Fortune Agribusiness, has alarmed Aboriginal native title holders, while environmental groups are calling on the NT government to refuse what they say is a “speculative” licence.

“This project is occurring in the arid zone of the Northern Territory, which relies on groundwater to sustain human and all other life,” the NT Environment Centre’s chief executive, Kirsty Howey, said. “This particular project we’re concerned about because of its scale.

“There are water quality issues across central Australia. It is beyond the pale to be giving water licences to developers and ensuring they have rights to water when there are no water rights existing with respect to safe drinking water in remote Indigenous communities.”

Fortune Agribusiness holds the lease to Singleton Station, a 294,000 hectare pastoral property in the western Davenport region, about 120km south of Tennant Creek. Fortune plans to invest $150m over eight years to develop 3,500 hectares of “intensive irrigated horticulture” including avocados, mandarins and grapes.

“When fully developed, the Singleton horticulture project … will be a catalyst for a new economic development hub for the Northern Territory,” the company said in its application to the NT controller of water resources.

Fortune chairman Peter Wood said the licence was not speculative.

“There’s no question that it’s big,” Wood said. “We’ve done all of our planning and modelling, and the financial modelling on this particular project, and I’ve been discussing with financiers and investors about a project on this scale. So there’s nothing speculative about it.

“That said, of course, what we finally end up with is somewhat out of our control now and it’s in the hands of the [NT] government. What they give us or don’t give us is not something I can give an answer to.

“In my view, the technical issues around the water resource and impacts on vegetation are well covered off in the detailed work surveys that have been carried out. Clearly, the other side of the coin to all that is the opportunity it creates for the region and for the people, and particularly for the Indigenous people in terms of jobs and training and opportunities.”

Wood said he had an initial meeting with native title holders but there was “a lot more to do”.

“Support was very strong from the native title holders, primarily around training and jobs for the younger generation, which we strongly committed to engaging with them to make sure that happens and happens in a productive way’,” Wood said.

But some native title holders have said they oppose the licence. Lindy Brodie and Heather Anderson, directors of the Mpwerempwer Aboriginal Corporation and native title holders, said they want the water to “stay in the country”.

“They can’t take that water,” Brodie said. “We need that water to stay there, for the animals and the trees … for bush tucker and bush medicine.”

Anderson said: “Water is not for free, water belongs to the land. It should stay there.”

Under native title legislation, developers and other potential land users must negotiate a land use agreement, or ILUA, with the native title holders – in this case the Mpwerempwer Aboriginal Corporation. Wood said Fortune was “very committed to engaging with them.”

Howey said she had “serious doubts” about the NT government’s ability to manage the groundwater impacts of a project this size.

“What we’re particularly concerned about is the admission in the application that there might be a range of what we would say are unacceptable and irreversible impacts, including the drawdown of aquifers containing ancient water of up to 50 metres over a reasonably short period of three decades,” she said.

“There is no guarantee of how or when those water resources and the communities and ecosystems that rely on them would recover. And we’re not sure that they would, in fact, ever recover. That means that extreme caution should be exercised.”

She said she was worried the project would go ahead “before the Northern Territory gets organised to put in place a pricing framework that is defensible, science based and aimed at protecting this most important resource.”

The NT government said it was reviewing its water allocation and management systems, and was considering a water trading regime. A spokesperson for the Department of Environment, Parks and Water Security said commercial operators do pay a fee when lodging an application, but confirmed there is no ongoing fee associated with water extraction licences, or for taking water. The NT is “not unique in not charging for water”, the spokesperson said.

The NT controller of water resources will make a decision “in due course”, the department spokesperson said, but that decision is expected soon. Under NT regulations the controller’s decision must be made as “soon as practicable” after the expiry date for comment, which was 4 October.

The NT government released a water regulatory reform directions paper in October 2019 and outlined a range of reforms, only some of which have been made.

Environment groups said the urgent priority is to protect the drinking water for Indigenous communities across the Northern Territory.

“The Territory should refuse this application on the basis that there is not an adequate scientific basis for the application to be granted, it will have an irreversible impact on water resources in the region, and the Northern Territory needs to sort out its regulatory regime, including to ensure that we are not giving away water to these speculative developers for free,” Howey said.

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