Wairoa freight hub may not be enough to save doomed Gisborne-to-Napier rail line
By Hannah Lynch
March 28 (BusinessDesk) – A freight hub at Wairoa, floated as a way to save at least part of the Napier-to-Gisborne rail link, may not be enough to ensure the survival of the line, says KiwiRail chief executive Jim Quinn.
Fenton Wilson, chairman at Hawkes Bay Regional Council, which owns the Port of Napier, has proposed the Wairoa hub where freight would be railed north to be loaded on trucks to continue the journey to Gisborne.
The northern leg of the railway is out of action because a storm washed out the tracks in several places but the multi-million dollar bill poses a dilemma for KiwiRail, which had already ear-marked the line as marginal and is under pressure to slash costs.
“The Gisborne-to-Napier line is not in high use on an expensive piece of asset and this is fundamental,” Quinn told BusinessDesk. “This is a reasonably remote part of the country and it will be hard to fix – this will cost millions.”
Earlier this month, a storm caused three big washouts along the line north of Wairoa, with one of the slips measuring about 100 metres.
KiwiRail increased the number of services on the Napier-to-Gisborne route to three from the one-to-two trains using the lines in January. The route is one of four headed for possible closure unless there were sufficient improvements to offset losses of more than $2 million a year. The line is predominately used to transport fertiliser, wood and fuel.
“If you do decide to fix the line you don’t want to risk it being eroded again,” Quinn said. “We are sitting down right now and thinking how much it will cost to fix and how long it will take. There is no point spending money that will be wasted.”
Hawkes Bay’s Wilson is also backing an approach to KiwiRail and the government from Gisborne Mayor Meng Foon’s to consider alternatives to mothballing the line.
“The freight could continue to be transported by rail from Napier to Wairoa and then by road further north while all the options are being explored and a solution is found,” Wilson said. “We have a 100 percent interest in seeing the line re-established – anything that limits the ability of the (Napier) port is a concern to the council.”
Quinn said while KiwiRail will continue to liaise with customers in the Gisborne and Hawkes Bay regions about what services can continue in the interim, the rail network must be assessed on the most economically viable option.
“If all we are doing is adding another handling centre – that is adding another cost so we have to think that through logically,” he said.
In February, KiwiRail signaled its full-year earnings would miss the targets set out in its statement of corporate intent. Earnings before interest, tax, depreciation and amortisation are expected to be $105 million to $115 million in the year ending June 30, compared to the SCI target of $139.5 million.
The railway posted a loss of $118 million in the six months ended Dec. 31, a deterioration from the loss of $111.5 million a year earlier.
Government grant income $72.7 million trimmed the loss to $45.7 million, though grant income a year earlier was $202 million and led to a profit of $90.8 million.