KiwiRail gets $40 mln for Coastal Pacific upgrade

KiwiRail gets $40 mln for Coastal Pacific upgrade

By Gavin Evans

Nov. 23 (BusinessDesk) - KiwiRail has received $40 million of Crown funding to increase patronage on the Coastal Pacific passenger service on the South Island.

The funds will be used to operate the Picton to Christchurch service year-round, add an additional 63-seat carriage for peak seasonal traffic, and add a new premium luxury carriage.

KiwiRail acting chief executive Todd Moyle said the Coastal Pacific, which resumed operations today after two years of earthquake repairs to the line, had been bringing about 42,000 passengers and $34 million a year into Marlborough and Kaikoura alone.

“With this investment we will see double that number within a decade, creating more than 400 new local jobs,” he said in a statement.

“The new premium service on the Coastal Pacific will allow us to tap into the fast-growing, international high-value travel market to deliver more benefits to Kaikoura and Marlborough. KiwiRail will be investing in upgrading our reservation systems and in international marketing for the premium service.”

Today’s announcement takes to almost $90 million the rail funding that has so far been pledged from the government’s Provincial Growth Fund. That includes $40 million committed earlier this month to develop a new freight hub at Palmerston North.

In addition, the New Zealand Transport Agency is considering funding a daily Hamilton-Auckland commuter service budgeted at $57.8 million for its first three years’ operation. In October Transport Minister Phil Twyford said KiwiRail would receive $35 million over four years to restore its electric engines on the North Island.

The new funding for the Coastal Pacific was announced by Prime Minister Jacinda Ardern at a function in Kaikoura today marking the resumption of the passenger service.

Full freight services resumed on the line in October, having been limited to night-time only runs for 13 months to enable repair work to continue during the day.

KiwiRail says the new premium passenger service may be operating in 2022, allowing for the refurbishment of the rolling stock.

To date, most of the PGF funding for KiwiRail has been for its freight business. The next largest sum was $5 million toward restoring the Wairoa-Napier line, $3 million went to planned rail upgrades at Whanganui, while investigations for Northland, Kawerau, Westport, New Plymouth and Southport collectively received another $1.5 million.

KiwiRail may also benefit from the government’s upper North Island freight and logistics review, which is also receiving an unspecified sum from the PGF.

KiwiRail, bought back by the government in 2008, has been hamstrung for decades by a lack of capital to maintain the country’s 4,000-kilometre track network and invest in new engines and more flexible rolling stock to remain competitive.

Ageing trains and tracks have seen speed restrictions placed on many routes, further reducing the competitiveness of freight services.

The previous government provided additional capital in two-yearly blocks - $450 million for the period through to mid-2019 – while it struggled to find a long-term funding solution.

And that remains to be found. In the meantime KiwiRail is unable to develop proper long-term asset plans, increasing costs and preventing it optimising its maintenance of bridges, tunnels and viaducts and its purchases of locomotives and rolling stock.

(BusinessDesk)

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