Regional ratepayers could lose 20 per cent of their investment in the Ruataniwha dam within the first five years if it goes ahead.
This latest development in the controversial water storage scheme, which has seen its parent company HBRIC and the Hawke's Bay Regional Council come under fire for its lack of transparency and accountability, was only brought to the table, via a report this week.
Two noted absences from the extraordinary council meeting were councillor Debbie Hewitt (conflict of interest) and the author of the report, HBRIC board chairman Andy Pearce.
According to the latter's report, clause 78 details a material change in the terms agreed with the new investor that there is now a "Call" option in which the institutional investor can compulsorily acquire 20 per cent of HBRIC's equity, at any time within the first five years after operations commence.
Mr Pearce said the deciding factor whether this option was adverse, neutral or positive was the price paid for it.
"HBRIC believes that it can negotiate an exercise price formula where, in the base case for uptake, HBRIC is close to being indifferent as to whether the option is exercised or not," he said. "This change is, therefore, considered to be neutral in the base uptake case."
According to the report, HBRIC's investment of $80 million will be 50.1 per cent of the initial equity and the institutional investor will hold 49.9 per cent in the limited partnership.
Talking to Hawke's Bay Today, Mr Pearce clarified that the HBIRC's investment in the Napier Port was not at stake.
"Let me be absolutely crystal clear, it is for 20 per cent of HBRIC's equity investment in the Ruataniwha Water Limited Partnership," he said.
He said it had been brought to the table now because it was part of the negotiations for the final terms, and there were always terms that needed to be negotiated and agreed upon.
The $36 million water buy-in was also addressed by Mr Pearce.
An alternative proposal is undergoing public consultation - for the council to take an extra 4 million m3 a year of water for environmental flows.
He said under this new proposal the council would get "slightly" more water for lower cost, compared with the current deed, and that there would be at least equal benefit to the environment.
Mr Pearce said that because there was more water available over the life of the contract it allowed for some experimentation. "[That is] the council has a greater ability to determine how best to derive the environmental benefits that are possible from those flows."