South Island iwi Ngai Tahu has been named as a potential investor in the Ruataniwha Water Storage Scheme.

Ngai Tahu Holdings Corporation Ltd (NTHC) and power company TrustPower have each signed a memorandum of understanding with Hawke's Bay Regional Investment Company Limited (HBRIC), the lead agency in the project.

The scheme will generate electricity, protect minimum flow levels on the Tukituki River and irrigate up to 30,000ha.

Ngati Kahungunu Iwi Inc chairman Ngahiwi Tomoana has been a vocal opponent of the scheme and said Ngai Tahu leader Sir Mark Solomon had offered to withdraw from the investment if the local iwi asked it to.


"They have asked us if they can invest in it. We said, 'We can't tell you not to'," Mr Tomoana said.

He said Ngati Kahungunu was not in as strong a financial position as Ngai Tahu, "but we would never invest in something that would destroy our taonga".

"Their asset company has seen it as a good investment, but at a governance level Mark Solomon has said they will instruct them to pull out if we request it." Ngai Tahu had offered to be a mitigating force for any negative effects of the scheme.

"They have been talking to us for the last three months and we think what will happen on the Tukituki River is going to flow right across the country."

Sir Mark said there was "still a long way to go" and welcomed an independent board of inquiry.

"There are many issues that all parties are working through and we have had discussions with Ngati Kahungunu and stand by those discussions," he said.

A scheme investor committee will be formed including TrustPower, NTHC and HBRIC.

Meanwhile, the Department of Conservation has waded into the debate over its draft report on the dam project, saying its decision not to submit the draft was made following "standard processes". The 34-page draft report set out the department's concerns about the way the Hawke's Bay Regional Council planned to manage water quality issues arising from the dam.

However, senior Department of Conservation (DoC) managers instead submitted to the board of inquiry considering the project a much shorter document - just two paragraphs - which did not deal with those concerns.

The Green Party says the report was changed under political pressure, but Conservation Minister Nick Smith said he was not aware of the draft report until Tuesday.

The email from DoC deputy director-general Doris Johnston, obtained by Radio New Zealand, was dated the day of her meeting with Dr Smith on July 29.

It said: "The minister wants to see the submission we are proposing to make on the Ruataniwha before it is lodged ... He is concerned and is likely to query whether we leave it all to the [Environmental Protection Agency] to consider."

Ms Johnston spoke out in a media release yesterday, saying the decision not to lodge the draft report was made by DoC on internal advice and had followed "standard processes".

Dr Smith said the issue was a "political beat-up by the Greens" who were disappointed DoC did not make a submission opposing the project.