There will be no conflict of interest if the regional council decides to sign up as a water user in the Ruataniwha Water Storage Scheme, says HBRIC chief executive Andrew Newman.

If the council decides to spend $43.1 million on the 35-year contract it will effectively become a water user in addition to being an investor through the Hawke's Bay Regional Investment Company and the regulator of consents for the scheme.

Mr Newman offered up Napier Port, which the company owns, as an example of how this relationship would work.

"The Port of Napier is 100 per cent owned effectively by HBRIC but in turn HBRIC is 100 per cent owned by the council," he said.


"The regulator [regional council] issues consents for the port for its operating activities, its regulates the port in terms of its maritime safety compliance, it regulates the port in terms of port activities in terms of oil spills."

He said it would be exactly the same way with the water storage scheme.

"The point is that the roles are separated and governed but they are still part of a whole," Mr Newman said.

"We own the port, the port has to be regulated, the port has to comply and, if it doesn't comply, it is open to exactly the same regulatory instruments and consequences of any other business and yet it is 100 per cent owned by the council."

He said this set-up was not uncommon.

"It is absolutely common. Hastings District Council owns commercial property, if I am right, they have a property holding company; they are the regulator of subdivisions and developments," he said.

"What you need to do is separate, to the extent possible, separate these conflicts - and that is a structuring issue, which is the way that we have done it."

In regards to the $43.1 million buy-in, the chief executive said this was an alternative offered up to the water being available to buy as and when needed, which was what was currently offered through the draft concession deed.

"It offers six years of water at no charge so we saw this as a good alternative for [the regional council] to consider," he said.

He said such a buy-in would offer more water to the regional council for environmental benefits in the Tukituki Catchment, including more water for Lake Hatuma.

"Which is an important but degraded wetland, more water into small streams to help during summer low flows and additional water to complement the current flushing flows which are included in the Ruataniwha consents," he said.

When asked if the buy-in would give any potential investor comfort that the scheme was viable, the chief executive said it would base its decision to invest on a range of matters which it would carefully analyse before making a final decision.