Government ministers will today receive an urgent legal briefing on whether they can proceed with the planned part-sale of Mighty River Power, after a Waitangi Tribunal report.
Prime Minister John Key is taking hits over the issue, but said he would not comment on the weekend that three New Zealand troops killed in Afghanistan were buried.
He and his ministers have less than a fortnight to decide whether to continue with plans to sell Mighty River Power this year and trigger a bitter court battle with Maori, or shelve it until next year.
The Crown Law Office was yesterday preparing advice for finance minister Bill English and state-owned enterprises minister Tony Ryall.
Green Party co-leader Metiria Turei called for Key to abandon his "arrogant" state asset sales plans.
Turei said the Prime Minister should grasp the opportunity to back off the assets sales plans until a referendum was held. "John Key has been very arrogant in his response not only to the tribunal and to Maori, but also to strong public opposition to their state asset sales plans," she said.
Labour leader David Shearer also called for Key to back down. "The whole process is shambolic. It has descended into chaos and is costing the taxpayer," Shearer said. "It has to be remembered that National has created this situation by trying to ram through its plans."
The Government's latest setback follows uncertainty over the future of the Bluff aluminium smelter, potentially affecting wholesale electricity prices.
In its interim report, the tribunal's presiding officer, Maori Land Court Chief Judge Wilson Isaac, recommended the Government delay the sale "in the national interest and and the interests of the Crown-Maori relationship".
Maori Council co-chairman Maanu Paul applauded the tribunal's "courageous stance", saying its recommendation would help force the Government to negotiate.
"The Government has got it very wrong and we patiently await its response," he said.
The Maori Party declined to elaborate on developments until they had discussed the report with claimants and the Government.
Although Key was not available for comment yesterday, a spokeswoman said the Prime Minister thanked the tribunal for providing the report. "Over the coming days, ministers will consider this material as they prepare to make decisions in early September about the proposed Mighty River Power share offer," she said.By Russell Blackstock Email Russell