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The money is part of the government’s NSW Private Irrigation Infrastructure Operators Program, linked to the Murray-Darling Basin Plan, to make MIL’s infrastructure more efficient.

It took MIL close to 12 months to sign off on the deal, and the project will see some channels retired and others reconfigured.

Murrumbidgee Irrigation (MI) has been offered a similar deal, but MIL general manager Anthony Couroupis said MI had not signed as yet due to tax issues.

Mr Couroupis said MIL decided to sign despite similar tax concerns; the government originally announced the deal as a $181 million offer, but that was GST inclusive.

‘‘We are confident the changes will be made [to the tax arrangement] that the government has promised, and encourage them to go get on with it,’’ he said.

The project will see about 35 farms — or 90km of channel — in the MIL area involved in the retirement, with another 50 farms involved in the reconfiguration.

Mr Couroupis said MIL would maintain supply and delivery services to landholders affected by the reconfiguration, but in a different way.

Other works include:

■ New irrigation meters including outlets that can provide higher flows and remote control capability;

■ Remote control and some automation of channel regulators, and;

■ Clay lining of channels at five locations.

‘‘We are yet to determine precisely what works will happen where,’’ Mr Couroupis said.

‘‘That detailed planning is under way and will be communicated with customers over the next six months.’’

The works are due to be finished by the end of 2016.

Some of the water saved under the project will go towards the 2750 gigalitres required under the Murray-Darling Basin Plan for environmental purposes.

Mr Couroupis could not confirm how much water would be returned, saying ‘‘that information is between MIL and the Commonwealth’’.

Murray Group of Concerned Communities (MGCC) chairman Bruce Simpson — who is also deputy chair of the MIL board — said this infrastructure funding was what the community had been calling for ‘‘for a long time’’.

Speaking from an MGCC perspective, he said the project would create opportunities for contractors, employment, and positive flow-on effects to support industries such as mechanical repairs and fuel.

He also said it would improve output per megalitre.

‘‘It’s a substantial amount of capital coming into the region,’’ he said.

Mr Simpson said the local area should receive a level of investment ‘‘equitable with the volume of water we have contributed for the Water For the Future [basin plan program]’’.

‘‘We are a major contributor of water.

‘‘The reason we will hold the government accountable is the investment in irrigated infrastructure in this region is of national importance.’’

Mr Simpson said this irrigation area was one of the largest — and arguably one of the best — flood irrigation systems in the world.