Face-off puts rail sale back on track

By PAM GRAHAM

While the Government was besieged on the seabed and foreshore issue on Wednesday, it was also facing off with Australian company Toll Holdings on the rail network buyback.

Executives at the meeting said it made progress towards selling the track back to the Government by the June 30 deadline.

It came after a hurry-up letter from Finance Minister Michael Cullen to Toll's managing director, Paul Little.

The two struck a track buyback deal last July after Cullen lambasted Toll publicly and Little jetted in to meet him.

Wednesday's meeting was between Ivan Kwok from the Treasury, Chris Mackenzie, Cullen's senior adviser, and Stephen Stanley and Charles Thompson from Toll.

Last year's sale of the track for $1 could have been finalised as early as December but problems remained over access arrangements and the return of land leased from the Crown.

As deadlines passed, speculation increased that the deal would not be done.

The Government had a fallback option of nationalising the network.

Toll has maintained that talks were continuing in keeping with a June 30 deadline before Track Co takes over on July 1.

The Government will invest $200 million in the track over five years and Toll has agreed to invest $100 million in rolling stock.

Toll has announced investments in rolling stock and is refurbishing locomotives, the first of which were revealed on Wednesday painted in green, gold and orange.

The Australians have rebranded Tranz Rail as Toll NZ.

Mackenzie said Cullen had written to Little outlining some issues and Toll responded.

"As a result, Toll and Government officials sat down and identified the issues and there is now a pathway in place to advance negotiations through to a settlement pre-June 30," he said.

The group that met on Wednesday would monitor progress and step in if necessary.

Outstanding issues included access fees and the land lease.

According to the heads of agreement, access fees will be set every three years and fee holidays will be possible if traffic increases.

Access can be lost if traffic falls below 70 per cent of present levels, and there are also service standard requirements.

The major users of rail wanted Government ownership of the track with open access and are watching for details on performance and on Track Co.

The deal struck by Toll was regarded as better than the old agreement with Tranz Rail, which limited the profits of the operator to a return on capital.

The $1 payment for the track is likely to be by cheque.