The Hawke's Bay Regional Council's $600 million Ruataniwha water storage project has suffered another major setback, with Ngai Tahu announcing it won't be an investor.
The council's investment company is trying to raise $275 million to fund the dam.
Ngai Tahu was a piggyback investor, relying on the expertise of electricity company Trustpower to guide an investment of up to $100 million between them.
In March this year, Trustpower withdrew from the Ruataniwha project, saying it was too risky and the returns were not high enough.
Ngai Tahu says its criteria for investing included identifying an appropriately qualified partner to replace Trustpower. As this hasn't happened, it has ended its Memorandum of Understanding with the council company to invest upwards of $50 million.
The chair of the investment company said on Monday it is hoped Ngai Tahu will reconsider once plans become more concrete.
Andy Pearce told Radio New Zealand's Checkpoint programme that finding investors would be easier when more farmers confirm how much water they will supply.
"Our view is that once we have that confirmed, there won't be any difficulty about raising the equity capital. In fact, we will be expecting to have another discussion with Ngai Tahu and other parties that we are having discussions with, even now."
Mr Pearce said he understands that Ngai Tahu is open to further talks.
Meanwhile, the investment company said it does not have a workable consent after a Board of Inquiry into the dam set tough conditions regarding the nitrate levels allowed to leech into the Tukituki catchment.