Farmers in Central Hawke's Bay say they cannot sign up to the Ruataniwha Dam project without more information to help them make a sensible business decision about the investment.
The hunt is on for alternative investors the controversial Hawke's Bay project after keystone investor Trustpower pulled out on Thursday.
In 2013, Trustpower and Ngai Tahu signed a memorandum of understanding with the Hawke's Bay Regional Council to look at investing more than $100 million in the water storage project.
Trustpower pulled its investment of more than $50 million on Thursday, telling the Stock Exchange its investment is not possible within its risk and return framework and the returns it would expect to get would not be high enough to recommend the investment to shareholders.
Trustpower said it wasn't certain that enough farmers would sign up to take water from the project early enough to give in the returns needed.
Regional councillor Peter Beaven said 47 percent of farmers needed have signed expressions of interest, which is not enough to make the investment attractive to major investors.
He said Central Hawke's Bay farmers have been the major proponents of the project and they need to sign up before the opportunity is lost.
But Federated Farmers Hawke's Bay president Will Foley said there were many reasons why farmers in the scheme's 30,000 hectare irrigation footprint may not yet have signed an expression of interest.
For a start, he said, the dam still hasn't been approved, and other crucial information, like the price of the water, has only just been sent to farmers. Many landowners are also waiting to hear from a Board of Inquiry draft findings on the environmental impact on the Tukituki River, due in April, because it will mean significant on farm costs.
Mr Foley said it was a pity all the information could not be set out together, so farmers are able to make an informed decision.
Meanwhile, a Board of Inquiry's draft findings on the dam's impact on the Tukituki River will be reported to the council in April. Farmers say they want to see those findings before making a decision, because supporting the dam will likely mean significant on-farm costs.
Exit 'could be positive'
IrrigationNZ, which champions water storage, said Trustpower's exit had created an opportunity for Hawke's Bay to really get in behind the project.
"The reality is the central Hawke's Bay economy is not flash currently," chief executive Andrew Curtis said. "I was down there the other day and the shops were closed down in town and it's not looking very good at all to be honest.
"It really does give an opportunity to the business community there to have a think about what their future is going to look like without something like the dam, and maybe for them to come on board and invest as well because to be honest the business community would be investing in its future as much as the farming community would be."
Mr Curtis said IrrigationNZ believes the Ruataniwha water storage scheme is still a very sound investment for farmers, though he acknowledged the challenge is to attract farmers who may be at very different stages of their careers.
"The challenge has always been with irrigation schemes is that you get people at different stages in their lives.
"Older generations they're probably not going to realise the benefits within their lifetime they're really making an investment for their children.
"And the younger generation sometimes its a little bit tricky to get the investment you require because you're probably already pretty indebted having bought the land in the first place."
Hawke's Bay Regional Investment Company, a council subsidiary, said it had been talking to other investors and negotiating on a confidential basis. The remaining big investor, Ngai Tahu, said there are still issues it wants addressed before it fully commits to the project and its involvement is still being assessed.
Wheels coming off project - Labour
The Labour Party says the Government should be concerned that the wheels have started to fall off the proposal.
The Government, which is keen to set up irrigation projects around the country, has set aside $400 million to invest in regional water schemes.
Labour's water spokesperson, Meka Whaitiri, says there's no doubt irrigation can be valuable but too little is known about the economic and environmental impacts of Ruataniwha.
"I understand that we are drier on the East Coast and wetter on the west coast and water storage clearly in my electorate of Ikaroa-Rawhiti can unleash a whole lot of opportunities.
But, look, building a huge dam on pretty, what I consider, shoddy science - so you got the environmental issues around this dam and now you're seeing major electricity companies like Trustpower pulling out because the economics (don't) stack up."
Primary Industries Minister Nathan Guy has previously said that Labour's opposition to the Ruataniwha dam is a slap in the face to Hawke's Bay farmers and that the need for this type of project is obvious.