UPDATE: Clifford Bay business case must meet KiwRail’s needs

Article – BusinessDesk

Nov. 1 (BusinessDesk) – State-owned rail operator KiwiRail says it will have to consider whether the Clifford Bay ferry terminal being further investigated by the government is a commercial proposition for it.

Update: Clifford Bay business case must meet KiwRail’s commercial needs

Nov. 1 (BusinessDesk) – State-owned rail operator KiwiRail says it will have to consider whether the Clifford Bay ferry terminal being further investigated by the government is a commercial proposition for it.

The government is assembling a team led by Treasury and transport officials to further investigate building a $422 million inter-island road and rail freight port at Clifford Bay, south of Blenheim, Transport Minister Gerry Brownlee said today.

“Cabinet believes the business case we’ve been presented is strong enough to justify further testing the viability of this major change to New Zealand’s transport infrastructure,” Brownlee said in a statement.

KiwiRail chief executive Jim Quinn told BusinessDesk after the KiwiRail annual meeting last week that the Clifford Bay ferry terminal was a government decision. If it went ahead the terminal owner would then approach KiwiRail and competitor Bluebridge and say “here’s a proposition”.

“If a decision is made to build it they will come and talk to us. If it isn’t commercial we won’t be signing up. I don’t mean that as a threat,” Quinn said.

Brownlee said that moving to Clifford Bay from the existing wharves at Picton could lead to larger ships plying the route, while cutting the journey time between Wellington and Christchurch by 80 minutes by ferry/road and 110 minutes by ferry/rail. The government is considering making the project a private/public partnership, with companies including Morrison & Co-managed Public Infrastructure Partners Fund expressing interest.

Other potential benefits would be lower fuel costs, reduced carbon emissions and smaller maintenance costs for rail and ferries, Brownlee said.

“I have discussed today’s news with some key stakeholders, including the Marlborough District Council, Port Marlborough, Strait Shipping, CentrePort and KiwiRail’s Interislander to inform them of our decision to proceed to the next stage,” Brownlee said.

“They understand that this decision could potentially rewrite the transport map for the country and the government is prepared to take the time required to make the right decision for New Zealand,” he said.

The review team will include government officials and private sector experts with a deadline of reporting back to the government by the end of April 2013. No details of the business case were released, with Brownlee saying the report was commercially sensitive and would affect ongoing negotiations.

A Building Infrastructure report released on Thursday sets out 67 initiatives to help build a more competitive economy, Finance Minister Bill English said. Future reports in the series will focus on natural resources and capital markets.

Separately KiwiRail is under pressure to keep operating rail-capable ferries. It is considering using wagons with rubber wheels to load ferries so it doesn’t have to buy expensive ferries with rail lines on decks.

New Zealand is one of the few places in the world that operates some rail-capable ferries. The ability to drive rail wagons on ferries effectively maintains a national rail network.

KiwiRail’s Arahura and Aratere ferries are rail capable and the Kaitaki is not. In the long-term the 28-year-old Arahura needs to be replaced.

(BusinessDesk)

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