The figures don't stack up for reinstating the train line between Gisborne and Wairoa, KiwiRail boss Greg Miller says.
Storm damage led to the closure of the track between Gisborne and Napier in 2012, but the Wairoa-Napier section reopened last June. Photo: Angela Thomas / The Wairoa Star
Gisborne District Council has identified the line's refurbishment as a shovel-ready project that, with Crown funding, could bolster the economy in the wake of Covid-19.
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The council's application to the government's Infrastructure Industry Reference Group said up to $23.3 million is needed for the project.
But KiwiRail, which would be responsible for the work, believes it could cost up to five times as much as that to reinstate the mothballed track.
It also said there is no guarantee of sufficient southbound freight to justify the proposed multimillion-dollar investment.
"Our view is it's actually quite high risk to put this capital in there when there's no certainty on revenue," Miller said.
He had provided that appraisal to the government, which he said had been "proactively" seeking feedback from stakeholders in the line's restoration.
Miller said KiwiRail was feeling the pinch of reduced train services due to Covid-19 and would be focused on building freight volumes on existing lines.
"As a state-owned enterprise, we've got to run a commercial business, and there are no subsidies for the freight network."
A feasibility study, led by Berl economists and released late last year, found there was enough freight out of Gisborne to justify running a 24-wagon train on the line to Napier each weekday, as well as a daily 24-wagon log service, with each wagon carrying the load of one truck.
Miller said KiwiRail had done its own research into potential freight volumes for the line.
He was yet to be convinced there was enough freight to justify the cost of restoring the line "at this point".
KiwiRail's research would not be published because there was a great deal of variability in freight volumes from day to day, Miller said.
Storm damage led to the closure of the railway between Gisborne and Napier in 2012, but the Wairoa-Napier section of the track reopened last June, thanks to $6.2m from the Provincial Growth Fund.
Miller said the coastal train line between Gisborne and Wairoa presented more maintenance challenges than the track between Wairoa and Napier, and climate change was likely to exacerbate those issues.
The issue has been rumbling in the region for some time, with many people wanting to see the line restored.
The CEO of the regional development trust, Te Tairāwhiti, Gavin Murphy, said the lack of a viable railway at the moment means businesses are suffering.
"Our local businesses and our local economy are paying freight rates substantially more than most others. Some of our businesses, like wood processing, end up paying $300 to $600 more per truckload to get their product into markets, compared with other regions.
"From our perspective, funding a range of transport options would give the region competitiveness, cost effectiveness, and resilience.
"To have KiwiRail not do the work to understand whether that's an option that could improve the economics for our local businesses is disappointing."
Murphy said he appreciated KiwiRail would be the organisation that could say whether the project was "shovel-ready" or not, but he wanted to see alternative options explored.
"The rail option is one, and coastal shipping through the port is another one, and we're keen to understand whether either of those transport options can offer a better outcome for our regional economy."
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