Clifford Bay port terminal has 'strong' case
BUSINESSDESK: 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, Transport Minister Gerry Brownlee says.
"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," he says in a statement.
The announcement came as the government released the fourth of six progress reports under its Business Growth Agenda, called Building Infrastructure, which totes up spending on projects ranging from the $5.5 billion Canterbury Earthquake Recovery Fund to the $5 billion upgrade of the national grid.
State-owned rail operator KiwiRail says it will have to consider whether Clifford Bay is a commercial proposition for it.
Chief executive Jim Quinn told BusinessDesk after the KiwiRail annual meeting last week that the 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," he said.
Mr Brownlee says 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 Infratil expressing interest.
Other potential benefits would be lower fuel costs, reduced carbon emissions and smaller maintenance costs for rail and ferries, Mr Brownlee says.
Relief for stakeholders
The announcement will be a relief for stakeholders including Port Marlborough, the district council and Wellington's CentrePort, who have felt out of the loop on the government's deliberations.
"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," Mr Brownlee says.
"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."
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 Mr Brownlee saying the report is commercially sensitive and will affect ongoing negotiations.
The Building Infrastructure report sets out 67 initiatives to help build a more competitive economy, Finance Minister Bill English says. Future reports in the series will focus on natural resources and capital markets.
Under pressure over ferries
KiwiRail is under pressure to keep operating rail-capable ferries. It is considering using wagons with rubber wheels to load ferries so it does not 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.
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Comments and questions8
No fresh water at Clifford Bay. Could prove a bit of a problem.
Still doesn't help with the problem of trucks down the Kaikoura Coast and the Hundalees
I'm sure all these "businessmen" have done their sums - and taken into account the tidal stream flowing through the Strait and the flow the rounds Cape Campbell. Being businessmen, they will know about these things. They'll appreciate the strength of the Nor-east winds that blow directly in to Clifford Bay creating a huge ground-swell (I'm sure they've all fished off the point in their launches). Not to forget the westerly that howls down the Awatere Valley.
So the new port will have to have massive enclosing walls (bigger than Oamaru, Timaru or Napier) and because of those currents and tidal flows, the port will have to be dredged many times in its life as the silting may be "interesting" to observe. But of course, being businessmen they'll know all about these things and will have calculated them into the Depreciated Cash Flow and Amortisation budget they will have done.
$300 million ... well we know these double over the construction time of most large civil engineering projects, but I suspect it will treble when the realignment of the rail and road corridors across what is a swamp (and only recently so), with erratic flood control - which will cost even more to mitigate.
But of course, this won't be done with the money "The Businessmen" put up - it will be done (or rescued?) at taxpayers expense. And THAT is my major objection. Be stupid or wise with your own money, don't rape the taxpayer - yet again!
Tell'm he's dreamin
To move the ferry from Picton to Seddon is hairbrained.
If 75% of the freight on the ferries is going from Auckland to Chch why not put it on ships from Auckland to Lyttelton instead of rail or trucking all that way? Use containers. Use road-only ferries for private cars and a few trucks.
Prehaps they should look at the real issues (rail is not working and continues to make massive lossed and coastal shipping is close behind !)
@ Dangermous - nice to think on but impractical.
It is possible to do this now, but there is no infrastructure to do it anymore - the Holm Line is long gone and while the large container ships could do this, they are too few between to warrant the small volumes that we actually ship. t is unlikely that they'll build the three ships needed to carry 100 to 200 containers that may need to go from Lyttleton to Auckland each day. Those would be tiny ships but cost almost as much as bigger ships. The balance of freight needs to go to Wellington and other places between (hence the number of break-freight trucks) and for a ship to call at each port would be too slow. The service time to customers would be unacceptable.
Further, it is unlikely to find favour with the Government with its $2 billion dollar investment in rail for it is only this freight that keeps the line open anyway.
Keep in mind that infrastructure requirement. Perhaps three freight trains a day - Picton/south each way - maybe would half fill a very small ship. Now this has to sail each way (i.e., two ships, minimum), every day to provide a competitive service with the current rail/road service. This means a third vessel is needed to lift extra freight (at shearing etc), or to allow maintenance of the other two in cycle.
So the reality is that shipping would be much cheaper, but far less flexible than the rail service - the same argument would occur between road and ship as currently between road and rail.
Look - let us keep it simple.
If it is such a "good idea" then let's do it. Let all these acute businessmen, who have done the figures to prove that it is so worthwhile, let them put the money up. If the deal is so great, think of the money they could make!
If they are not willing to do that - risk their own dosh - then forget the deal.