Member log in

KiwiRail mothballs Napier-to-Gisborne line, highway upgrade planned

(BusinessDesk) State-owned railway KiwiRail will mothball the loss-making Napier-to-Gisborne line, saying the $4 million cost to reopen the track is not worth forecast maintenance costs, which are set to rise to $6 million a year.

It will no close the 212km line completely, as the rail assets have a 10-year lifespan and may be worth reopening if circumstances change in the future, chief executive Jim Quinn says.

Mothballing will cost the state-owned enterprise between $2 million and $4 million to make it safe, with annual maintenance charges of between $200,000 and $800,000.

The decision comes as Transport Minister Gerry Brownlee announced a $4 million package to upgrade State Highway 2 between Napier and Gisborne to allay concerns about moving freight between the two cities. The investment will be in improved passing lanes.

The New Zealand Transport Agency does not expect the decision to have much impact on traffic volumes.

Since the line closure in March, an estimated five truck movements a day have been added to the highway.

"We need to ensure we invest in areas of the network where we are able to grow business to a level it is commercially sustainable, and sometimes that means making hard decisions," Mr Quinn says.

"The costs of both running the trains and maintaining the infrastructure would mean an annual cash deficit of between $5 million and $8 million a year."

KiwiRail is on a drive to strip out $200 million in annual spending if it is to meet forecast earnings of $64.6 million by 2013. It missed its statement of corporate intent revenue target of $737 million, as it posted annual sales of $71.58 million in the latest financial year.

The decision to mothball rather than close the line means the company could reopen it once major forestry harvesting in Gisborne kicks off in 2019, a report on the viability of the line says.

KiwiRail could not see income from the line rising above $2.5 million a year.

Comments and questions
14

Another economic mistake.

Yes, Thanks Dr Cullen, whatever would have done without your final farewell gift to the country.

Unfortunately Dr Cullen's wise move to rescue NZ's strategic rail assets from private interests is being undone by National's "hate rail / love roads" policy.

Score another for Friedlander and Truckie Joyce!

Really dumb

A disgusting decision by the government on any level of scutiny. The money required would scarely have built a couple of passing lanes on the highway which will require billions to turn into a real road (which I had the misfortune to drive last year).

Even though I should be a natural constituent of the incumbent government, I won't tolerate, "government by ideology" from any parties of any political persuasion, which is exactly what this is. Pragmatism is a way to keep my vote which - this isn't.

The railway saw a revival in the last 12 months by people who are obviously go-getters and taking up to 30 trucks a day off the highway in the summer vegetable season.

Furthermore, the government are defying the wishes of the local constituency including their own. This appears to be nothing more than heartless bloody-mindedness. To the government - pease feel free to hang your heads in shame.

I had been considering returning to New Zealand from Oz, but see this as a return to the bad old ways.

Of this decision I have no doubt that it will be referred to in future as "What on earth were they thinking?"

30 trucks off the highway = 30 sets of road user charges, fuel tax, registration fees etc out of the Government coffers. Wonder if they are as addicted to/dependent on road transport as the rest of us?

Get your red caps off people. This has been on the cards ever since the line got wiped out. The people of Gisborne have been given every opportunity to show they will increase use of the line, They havent been able to do that so it makes good economic sense to close it until such time as it is economically viable. I live in Wanganui where a spur line was reopened a couple of years back after 20 years of being closed because of growth in the area. It even says this may happen in the above article. Id rather they saved the 8 million a year personally rather than flushing it down the toilet.

But they have shown they can support they line. Ravesndown wanted to tripple the fertiliser it railed to Gisborne (to around 2000 tonnes/week), Kiwirail turned them away. Local companies wanted to tripple the freight they sent by rail to Napier and beyond, Kiwirail turned them down because they didnt have enough locos, crew or wagons (apparently). A logging company wanted to start sending logs by rail from Wairio to Napier (way back in July last year), they got delayed and fluffed around by Kiwirail and the service never got started.
Try learning more information about a topic before making uninformed statements.

As much as I love rail - which I do - if the numbers don't add up there is naught one can do about it. I'm not sure it's wise for the public to subsidise rail which is not economically viable just because it make some people of a particular political persuasion all warm and fuzzy.

Stop trying to say support of rail is a political position, what only socialists like rail, are you mad? whatever the side of the fence you are on rail is the most efficient to move heavy goods and as part of a transport plan (reducing the long haul truck fleet and putting it on the rail as cheaply as poss) operated by a small country with limited resources wanting to keep input overheads down to a minimum it makes so much sense, not to mention lowering of carbon emissions (another political ideology I suppose despite the overwhelming evidence) the rest of the world understands this but dumb old NZ knows better, again a case of knowing the cost of everything and the value of nothing.

Hi Andrew,

But the numbers as published in the report done by the Gisborne District Council do. Despite what KiwiRail state those people on the ground in Gisborne has made out a strong financial case which was just developing as the line was washed away. It was based on an accumulation of a numer of private enterprise companies including MainFreight who were willing to use the line and were only blocked by the lack of rolling stock which kiwiRail could not supply.

Tough economic realities, make the decision inevitable. There is no sense in throwing good money after bad.

This is another classic nail in the railways coffin. National transport infrastructure is not purposed for making a profit. It is purposed for providing a service. Kiwirail were given the WRONG mandate, with enormous expectations that could never be met. They are being forced to operate on a business model of shutting lines that do not have an anchor client, even though the sum of the other clients operating on these lines would be greater than the anchor client alone.

It doesn't take a mathematician to work out that $4mil to rehab this line now is less than possibly double that to rehab the entire line after misuse creeps over the line in the years to come when we finally wake up and want to use this line!