A senior Treasury official has acknowledged that Maori rights in water and geothermal resources are a risk to the value of energy companies, and says that will be made clear to investors when Mighty River Power shares go on sale this year.
However, the relevant paragraph will not be written until after a Waitangi Tribunal hearing on the issue is completed so that the Treasury can assess the impact of the tribunal's findings.
Treasury deputy secretary John Crawford yesterday gave evidence to the Waitangi Tribunal, which is hearing an urgent Maori Council claim for the sale of state-owned energy companies to be halted while Maori rights to water and geothermal resources are determined.
Mr Crawford said that although he did not believe the partial sale of the asset would affect any Maori rights, it was clear that the issue of geothermal and water claims would have to be disclosed in the offer document.
"In deference to the tribunal, we are not writing that until we see what the result of this process is. We are running due diligence to ensure all risks material to investors are disclosed and they will be properly explained in the offer document."
He said the possibility of future levies on water or payments for energy companies to access water could impact on a company, although there could also be no impact, depending on how rights were recognised.
When asked why the Government could not wait until the issue of water rights was resolved, Mr Crawford said there were limited opportunities for initial public offers. He also questioned why, if it was so urgent, Maori had not raised their complaints earlier when the partial asset sales were first announced.
He acknowledged that some "mum and dad" investors would believe the Government would not cave in to Maori claims for the rights because of Mr Key's comments that nobody owned the water and the Government could ignore any Waitangi Tribunal recommendations.
And he agreed that there would be political pressure from shareholders on the Government not to recognise Maori rights in a way that might affect the value of their shareholdings.
The Crown began its case yesterday and Crown counsel Paul Radich argued that going ahead with the partial sale of the assets now would not affect Maori rights or the Government's ability to recognise them, even though the extent and nature of those rights were yet to be determined.
However, Maori Council lawyer Felix Geiringer disputed this in questioning, saying there were some options which would be precluded after shares were sold, such as a shareholding agreement between the Government and the Crown.
The Crown said there was a range of ways other than shareholdings through which Maori rights could be recognised - such as through joint ventures, or commercial agreements for the use of water.