"It will also discard the benefits of the present electrification, and the inevitable rundown of the system will create a barrier to complete electrification when fuel prices inevitably rise again.
"It will also be a major setback to any hope of getting a passenger commuter service between Hamilton and Auckland any time soon," he said.
KiwiRail Group general manager Iain Hill said the company was still reviewing the decision and the KiwiRail board would consider the options in late August.
"The electric locomotives have been operating on the North Island main trunk line between Hamilton and Palmerston North since the late 1980s. They are now nearly 30 years old, their performance is increasingly unreliable and that is impacting on our on-time performance and undermining customer confidence just as we are encouraging people to shift from road to rail," he said.
Mr Hill said the company was still reviewing a number of options, including replacement with newer more reliable electric locomotives, refurbishment of the existing electric locomotives, or replacement with a diesel fleet.
"A final decision on the electric locomotives will not be made until we have carefully reviewed all options and examined the business case for each," he said.
The backwards march took place at the same time as protesters converged upon Parliament in Wellington, marched up Queen St in Auckland and walked backwards across a railway line in Tauranga.
