'Coal route' may be costly for new railtrack owner

By PAM GRAHAM

The new owner of Tranz Rail tracks could face pressing repairs to the West Coast line because the Land Transport Safety Authority is worried about safety.

The authority is commissioning an independent review of the so-called coal route from Lyttelton to Greymouth and Westport, where operating restrictions already apply.

Spokesman Andy Knackstedt said the review would take three months. Its recommendations would be discussed with Tranz Rail and steps taken to implement them.

The authority can close a railway line or revoke an operator's licence.

Tranz Rail is trying to sell all its tracks to the Government for $1.

At the same time, Australian company Toll Holdings is bidding for Tranz Rail and it is not clear whether it will end up keeping the tracks or selling them to the Government.

No one knows the extent of the liability the tracks will be to their future owner. The Rail Freight Action Group estimates that more than $200 million of maintenance has been deferred.

The Government has pledged $100 million to improve the network over five years if its plan is successful.

Tranz Rail chief financial officer John Loughlin said on Monday that $50 million to $70 million was need to refurbish rail bridges.

"Looking forward, there is quite a substantial liability the Crown is picking up which is not reflected in the current accounts," he said in reference to bridges.

The Business Herald understands concerns about the West Coast line relate to four bridges and the condition of the bed under the track.

Loughlin said a lot of work had been done on rail bridges about 20 years ago and Tranz Rail was expecting to start improving them again in three to five years.

Toll Holdings managing director Paul Little said he was not "overly concerned" about the bridges. Tranz Rail's Monday presentation to investors was bland and lacking in credibility, he said.

Little, who made his own presentation about Tranz Rail to Toll's board yesterday, said directors were comfortable with events.

He will return to New Zealand next Monday and Tuesday to talk to institutions. The Crown is also briefing institutions next week.

Tranz Rail managing director Michael Beard said on Monday that there would be a different approach to the track under Crown ownership.

Some Tranz Rail shareholders have called for the West Coast line to be closed because it does not make enough money.

* Tranz Rail has chartered a 91m wave-piercing catamaran to replace the Lynx fast ferry on the Cook Strait from August.

The new ferry can carry 760 passengers and 175 vehicles, but no freight. It will run year-round, but only at weekends during winter.

Tranz Rail said it would save $8 million a year because of the Lynx switch and its introduction of a freight vessel, the Purbeck. The replacement ferry starts in August.