Goalposts could shift before $80m invested in Ruataniwha Water Storage Scheme

A decision on the future of the proposed Ruataniwha Dam will be made next week. Photo / File

Conditions the Ruataniwha Dam must meet before receiving an $80 million ratepayer-funded investment could change, just a week before the scheme's future is decided.

Tomorrow the next steps in the Ruataniwha Water Storage Scheme (RWSS) will be discussed at a Hawke's Bay Regional Council corporate and strategic committee meeting, with members recommended to include a new condition precedent before council invests, and alter an existing condition.

There are currently four conditions precedent. Last July the council voted that three of these had been met - authorising a draw-down of $80m, less development costs, for investment in the scheme.

But progress on the RWSS stalled after a new council was elected late last year, with a review commissioned into the key legal, financial, economic, environmental and engineering elements of the scheme.

A decision on the scheme's future will be made next Wednesday.

This review - officially received by the council this month - said because the scheme was both "bold and transformational", risks would be involved whatever decision the council made.

The two new and altered conditions relate to the two elements of risk councillors expressed most concern about - the financial and environmental elements.

A paper for tomorrow's meeting - written by council group manager strategic development James Palmer - states one of the key financial risks identified in the review related to the uptake of water sales.

The condition precedent that 40 million cubic metres be sold has already been met.

However as part of the review the council's investment arm, the Hawke's Bay Regional Investment Company (HBRIC), and the review's principal financial adviser, John Palairet, recommended this be increased.

Mr Palmer wrote that "a revised uptake figure is expected to increase confidence in the RWSS generating sufficient cash flows to meet the return requirements of capital providers and accelerate the arrival of returns to HBRC".

So the committee will tomorrow be asked to agree to modify this condition up to 50 million cubic metres.

With several environmental risks outlined in the review, the committee is also recommended to introduce a new condition precedent that investment would be subject to further review of the scheme's existing environmental management package.

This would include approaches to managing nitrogen under such farm plans, and flushing flows, and that any changes to this management package meet the council's satisfaction two months before financial close.

These recommendations come exactly a week before the council's "cup of tea" on the controversial scheme ends, with a decision to develop or ditch the project expected on May 31.

Other recommendations before the committee include requesting the HBRIC board consider extending a moratorium on further investment - placed on the company in December - until one month after a land transfer matter has been resolved.

A Supreme Court judgment is awaited on a proposed land swap needed for the scheme to go ahead - which would involve swapping 22ha of Ruahine Forest Park, downgrading its conservation status, and flooding it.

It also recommends the committee request staff engage with two other parties on the scope of a potential application to the Environment Court on the interpretation of any Plan Change 6 provisions, and any RWSS consent conditions.