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.