Hawke's Bay Regional Council's dual role in the Ruataniwha Water Storage Scheme is again at the forefront of the debate.

At present the Council is both the Bay's environmental regulator and a major investor in the scheme.

Local Government New Zealand (LGNZ) President Lawrence Yule said these were new challenges to be faced.

"This is the first time that a regional council has entered this development space in such a large way," he said.


"There have been some public perception issues around managing their various roles in this. On one hand they are a regulatory agency and on the other hand they are a big player in an economic development, and how they manage that for some people has been contentious."

HBRC Liz Lambert would not answer fresh questions, despite LGNZ raising this issue again.

Instead a council communications spokeswoman referred Hawke's Bay Today to previous stories written about the two separate roles.

Hawke's Bay Regional Investment Company (HBRIC) chief executive Andrew Newman did however touch on the council's dual role when he explained the RWSS' multiparty management agreement. Mr Newman said under this agreement, the farmers are effectively customers of the scheme and HBRIC is the promoter of the scheme.

"Ultimately the Ruataniwha Water Scheme will be owned by what we call the Ruataniwha Limited Partnership, which will be the culmination of investors sitting in it with whatever share of equity they hold.

"So a different entity is going to emerge here. And those obligations to those contracts are novated across to that company with HBRIC sitting there as an equity partner of some scale." Essentially, once the new company is formed there will be the substitution of a new contract or new party for the previous one, which means that the previous obligation is considered discharged or the previous obligor released.

Mr Newman said HBRIC will effectively become the holding company of the regional council and will end up with an associate company called the Ruataniwha Limited Partnership.

"Now in terms of the relationship with the council - [it] has essentially two roles," he said.


"It has got its role as a regulator under the RMA (Resource Management Act) and that is an entirely separate role.

"The other role which HBRC has which is a long-term role is that the ownership structure of the scheme is set up under a thing called a BOOT " Build, owner operate transfer model."

Mr Newman gave the example of Napier Port, which runs the consenting through the HBRC regulatory team if it wants to dredge the harbour channel. "There is nothing different about that than is ultimately the case with the Ruataniwha Ltd Partnership," he said. "The regulatory role is really distinct and separate, and it is exercised and exercised consistently across a myriad of councils across the country where there are similar situations." In this case HBRC will effectively write a concession to scheme operator Ruataniwha Ltd Partnership that has a concession period of 70 years.

"At which time at the end of that 70 years the infrastructure transfers back to the council or to the public sector at no cost."