A contract awarded to a Waiuku cake maker to build a major sewage plant on the West Coast has been cancelled and the manager who oversaw the deal has resigned.

Westland District Council said today that both it and the company contracted to build a major sewage plant in Franz Josef had agreed to cancel the deal.

That company, Techno Economic Services NZ (TES NZ), was awarded the contract after flooding destroyed the town's sewage ponds.

TES NZ had no previous experience in waste management or construction and its director and shareholder, Neha Bubna, is the sole director of cake making company Cake Culture, based in Waiuku, south of Auckland.

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However, the council said that the company's parent company, TES India, was comprised of a group of specialist environmental engineers and consultants with international expertise in industrial effluent, sewage and water treatment plants.

"Work on the Kumara and Whataroa water supply upgrades was to be carried out by consultants from TES India, in conjunction with New Zealand contractors," the council statement said.

The tender for the project was overseen by a manager who was stood down after a Serious Fraud Office (SFO) investigation was launched into the matter.

A council spokeswoman confirmed to the Herald that the man had resigned within the last few weeks.

The project was approved by the former council, despite opposition from the Franz Josef community, the council spokeswoman said.

It was subsequently rejected by the newly-appointed council, which instead recently agreed on an alternative $1.3m plan to protect the sewage ponds from flood risks, she said.

Council chief executive Robin Reeves said in a statement that the organisation's focus was on moving forward to ensure these necessary water supply upgrades were carried out efficiently and effectively.

It had commenced negotiations with the next preferred bidder to ascertain its availability to undertake the contract.

The Ministry of Health's subsidy of $242,600 for the Kumara water supply upgrade was withdrawn as a result of the delays, however the ministry had indicated that the funding remains available to reapply for once we have a replacement contract in place, Reeves said.

Bubna or the former council manager could not immediately be reached for comment.