KiwiRail invited to run new Wairoa-Napier log train

In a behind closed doors meeting, the Hawke's Bay Regional Council has invited KiwiRail to run a reopened Wairoa to Napier rail line as well as maintain the tracks.

The commercial details of the deal are not being released but Hawke's Bay Regional Council (HBRC) interim chief executive Liz Lambert confirmed to BusinessDesk the proposal is related only to establishing a log transport service from Wairoa to the Port of Napier, with no early prospect of the discussion turning to reopening the badly slip-damaged line between Wairoa and Gisborne.

A decision on the service has been much delayed and Ms Lambert confirmed HBRC had originally proposed having a third party operate the service. "This is an alternative proposal we are putting to KiwiRail," she says.

KiwiRail chief executive Peter Reidy said in an interview this week he was expecting a proposal from HBRC, but if it is to be acceptable the council and any commercial partners would need to bear the whole commercial risk of restoring the line to operability and maintaining it.

"We want a take or pay arrangement. We won't take the commercial risk," he said. "If HBRC is the only customer, then we would expect full cost allocation."

Ms Lambert declined to discuss the details of the proposal, which now requires both agreement with KiwiRail and confirmation from forest owners in the Wairoa/Nuhaka region they will use the service as large-scale plantation forests are fast coming to maturity.

"We need to sign sufficient customers to make it viable," Ms Lambert says. "We're starting on that track now."

Wairoa export log harvests are forecast to treble to a million tonnes by 2020 and increase after that time.

A key reason for the regional council's decision to underwrite a rail route reopening is to prevent a massive surge in truck volumes on the main highway between Wairoa and Napier. Forest managers estimate half of the coming volume of logs can move by rail from a logging hub at Wairoa.

Ms Lambert held out little hope for the aspiration of Gisborne log-owners and fresh produce sellers to reopen the Wairoa to Gisborne part of the line.

"We are focusing on Wairoa to Napier, no further north, certainly in the medium term," she says.

(BusinessDesk)