The Hawke's Bay's Ruataniwha Water Storage Scheme has been dealt another blow after the South Island's Ngai Tahu followed Trustpower in withdrawing from the irrigation project.
The proposed development is part of the wider Tukituki Catchment Proposal that was granted resource consents by a Board of Inquiry last month.
However, the board imposed more stringent conditions on run-off into waterways that undermined the economics of the scheme for farmers.
Ngai Tahu had been relying on the technical expertise of Trustpower, which in March withdrew from a memorandum of understanding to fund up to $60 million of the cost of the project, saying it didn't meet its risk and return framework.
Hawkes Bay Regional Council today confirmed Ngai Tahu has withdrawn from the MOU.
"Ngai Tahu have been looking for a partner with infrastructure expertise as well as an entity already operating in the South Island," said council chief executive Andrew Newman.
"Trustpower brought both of those qualities to the table and Ngai Tahu were depending on an investor partner to meet those needs."
The council's Hawke's Bay Regional Investment Company is pressing ahead with "gaining workable resource consents through the Environmental Protection Authority's Board of Inquiry, and the signing of Water User Agreements with farmers," it said.
It is talking to other potential investors.