The Hawke's Bay Regional Investment Company has asked for $500,000 to effectively "start the construction phase" of the Ruataniwha Dam.

At yesterday's council meeting it was noted in the company's report that last November the council resolved to approve an increase in the Ruataniwha Water Storage Scheme budget by $1.3 million of which $922,000 was sought from the Ministry for Primary Industries' Irrigation Acceleration Fund.

However, according to its latest report the company was unable to secure the full $922,000 applied for from the fund and have been left with a shortfall of $347,000.

As such, they asked for council to approve a further borrowing of $500,000.


The company's board chairman, Andy Pearce, said the reason for the shortfall from the Ministry was because it said money for early geotectonical work was not required to reach financial close.

"So late December we were faced with the decision whether or not to commence these works," he said.

"We came to the view that we should commence them nonetheless because without commencing then we would be placing in jeopardy some part of the work leading up to the construction start date.

He said the company also sought to have a close and supportive engagement with the contractor.

"We made that decision in the knowledge that we would still be within our approved budget and our approved borrowing capacity," he said.

Councillor Peter Beaven said the Ministry's decision not to grant the full amount sought by the company crystalised a significant issue for him.

"It is basically that the extra funding that MPI refused to put forward is actually in effect to start the construction phase of this process in advance of the four conditions precedent being met [which the company must meet for the project to go ahead]," he said.

"And it is my view that we have no legal or moral mandate to agree to do that."

He said the regional council had a pact with the people of Hawke's Bay that when the four conditions precedent were met then they would hit the green lightand put up the $80 million.

"Before that happens there is just so much risk that we will be spending money, wasting money because the project doesn't proceed," said Mr Beaven.

Moreover, he said that the process appears to just go on and on.

"I don't think we should be spending a single penny more than is required to meet the four conditions precedent and that is why I am a 'no' to this."

The extra funding was approved by council with a vote 5-4.