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Fiordland monorail project declined

Fiordland monorail project declined

By Pattrick Smellie

May. 29 (BusinessDesk) - Conservation Minister Nick Smith has knocked back controversial plans to build a monorail through native forest as part of a tourism initiative that would have opened up a new route between Queenstown and Lake Te Anau, but which independent economic analysis suggested had "little prospect that the business idea could translate into a viable business."

"This proposal does not stand up either economically or environmentally," said Smith, announcing a decision he had been mulling since before Christmas.

An independent tourism and financial analysis by economic consultant Ian Dickson concluded it was not viable, there would have been significant impacts on the area's flora, fauna and natural heritage, and the route was "not sufficiently defined to properly assess the impacts."

While almost all the project was outside the Fiordland National Park, it fell within the vast area of the West Coast defined by UNESCO World Heritage listing.

The $210 million-plus development, advanced by millionaire Wanaka businessman and property developer Bob Robertson's vehicle, Riverstone Holdings, had attracted fierce local opposition, especially from Te Anau township tourism businesses, which feared the impact of a hotel he proposed to build on the road between Te Anau and Milford Sound, where the monorail would have terminated.

“This monorail had more merit than the Milford Tunnel proposal and has been a more difficult decision to make," said Smith, who last year turned down a competing proposal to dig a tunnel under the Southern Alps near the top of Lake Wakatipu to connect with the existing road to Milford Sound.

"I appreciate my decision will come as a major disappointment to Riverstone Holdings."

The company had spent years and several million dollars consulting with the Department of Conservation on a route through the Snowdon Forest Park, an area with a lower environmental protection status than a national park, to establish a viable six metre wide corridor for the proposed 43.8 kilometres of monorail track.

Among Smith's major concerns was the fate of the monorail infrastructure, in the event that the project failed commercially and was abandoned.

"The monorail infrastructure might well become a 'white elephant' taking up space in the forest to no useful purpose," says Smith in a letter to Robertson declining the proposal, also released today. "I am concerned the that the business might fail either during construction or thereafter."

While a bond might have been posted to cover the cost of the monorail's removal, it was likely to be as high as $275 million and so large that "it is unlikely that any bank stand surety for it", while the funds would not be able to replace vegetation and species displaced by the development, even if the rail was removed.

Dickson's estimates of the enterprise value of the proposal went as low as negative value of $441 million, compared with Riverstone's estimate of a positive value of $118 million. The proposal used five year old costings, unsupported market research, and optimistic views about demand for the journey, which meant the business plan "cannot be relied on," Dickson concluded.

Smith said he remained open to proposals for alternative access options in Fiordland.

"The strategic issue of facilitating better transport options between Queenstown and Milford remains. The door is still open but proposals will need to be both environmentally sustainable and economically viable."

Smith's letter to Robertson also makes clear he accepted the project could have fitted the "public enjoyment" purpose for which the land is held, since new visitors to the Snowdon Forest area would have gained enjoyment, despite a lower quality of enjoyment among existing users, and that tourism ventures inside World Heritage areas are not necessarily ruled out.

"I need to be confident that the particular scale and character of those adverse effects is compatible with heritage obligations and that steps taken to protect heritage values will be sufficient."


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