The Hawke's Bay Regional Council is considering investing more than $5 million to help reopen the Napier-Gisborne railway.

The possibility is revealed in the Draft Annual Plan which will be put to the council on Wednesday before being released for public consultation. Submissions close on May 12.

The proposal to lease the line if it is reopened by KiwiRail and to then run a rail freight service comes from the Napier Gisborne Rail Establishment Group (NGR), which estimates $10.7 million will be needed to finance capital and operating budgets, including $5.3 million to buy rolling stock, $2.4 million for working capital and a $3 million disaster contingency reserve.

A 51 per cent shareholding from the regional council is proposed, with a contribution of about $5.46 million through to the 2018-2019 year, with investors from Hawke's Bay and the Gisborne region holding the remaining 49 per cent interest in a holding company, which would be formed especially for the purpose.


Any investment by the council would require the Government and/or KiwiRail to fully fund the restoration of the railway line, satisfactory leases on the line and locomotives, and agreements on freighting of logs and fruit and vegetable produce beyond 2020, to ensure the long-term viability of the service.

NGR projects losses would be recorded in the first three years, but the return over the longer-term would cover the council investment.

Group chairman Alan Dick said Hawke's Bay roads face huge congestion issues if the line is not reopened, and as logging volume to Napier Port increases an estimated 10-fold on the 90,000 currently being transported on Northern Hawke's Bay roads.

An example of the congestion happened on Thursday evening when logging trucks and other carriers stretched for hundreds of metres from the port entrance, almost completely blocking Breakwater Rd to other traffic. At times entry and exit from Hardinge Rd was also blocked.

Mr Dick said the proposal includes plans for a rail hub at Wairoa, where logs would be scaled and processed before being railed directly to the port.

"The proposal is for people to comment on whether they consider it a priority, and whether they believe the council should undertake a commercial investment to do it," he said. "It stacks up and we're very confident it will stand the test."

It's two years since the line was blocked by a washout northeast of Wairoa, leading to KiwiRail and government decisions against repairs and to mothball the line.

Mr Dick said that while the group, KiwiRail and Government officials had had several meetings, he cannot yet predict the decisions which would be made, and said: "It's at a sensitive stage."


He said much of the work on the project had been volunteered from interested parties, with a financial input estimated at about $60,000 from the council and allied sources.