A major backer of the controversial Ruataniwha Water Storage Scheme has withdrawn as an investor in the dam saying that it would not be possible to invest within its "risk and return framework".

In a statement released today Trustpower said it had terminated its memorandum of understanding with the Hawke's Bay Regional Council's investment arm, the Hawke's Bay Regional Investment Company and Ngai Tahu Capital Limited, which was signed in September 2013.

The news came after a business case was presented to the Regional Council. HBRIC's 75-page business case, setting out its proposal for the council to invest up to $80 million of ratepayer money in the irrigation scheme, said scheme would provide a $4 billion boost to the local economy and create 2500 jobs.

The water storage scheme has been the subject of much debate in Hawke's Bay with some groups calling for it to be shelved because of the potential for economic and environmental problems.


"Trustpower has determined that it will not be possible to invest within its risk and return framework for a project of this nature," the Trustpower statement said.