Plan B for Napier-Gisborne rail

DAMAGED: Major washout on the Napier-Gisborne railway line, north of Kopuawharo, closed the line.PHOTO/SUPPLIED

Hawke's Bay Regional Council will consider alternatives to leasing the Napier-Gisborne railway line, such as re-opening the line's Wairoa-Napier section in a joint venture between KiwiRail and Napier Port.

The Napier-Gisborne Railway Shorthall Establishment Group (NGR) is using a project team to develop a business case to be considered by the council next month, after KiwiRail made an offer to lease the damaged railway line.

A progress report by council chief executive Liz Lambert outlined several concerns about the draft business case. KiwiRail had imposed "tight timeframes" on the investigation, requiring a decision by March 1.

The freight forecast to travel on a reopened Napier-Gisborne railway line was "just not sufficient" to pay for reconstruction, but there was a "significant opportunity" to re-open the Wairoa-Napier component.

There were also "significant trading losses" projected in the line's first four years of operation, which "could make finding private investors challenging".

The rail line has been mothballed since late 2012.

The Government has indicated it will not fund its repair.

Ms Lambert said estimates for the reconstruction of the Mahia-Gisborne section of the line were currently between $3.5- $5 million, and the forecast volume of freight from Gisborne was not adequate.

For that reason, $125,000 of funding earmarked for an engineering design study to better quantify the costs of reconstructing the line had been put on hold.

The other half of the business case costs comprised $75,000 for personnel and $50,000 for strategic advice.

No major capital investment in the Napier to Mahia section of the line was required initially and a Wairoa service could run on the track in its current condition, according to KiwiRail sources. "A significant volume of logs from Wairoa are exported through Gisborne, so there is a cargo-gain opportunity for Napier Port."

She suggested KiwiRail and Napier Port could negotiate an agreement, which would not involve the council directly, that would provide for the hubbing of logs in Wairoa and their subsequent transport to Napier Port at the optimum time for the port. "This has the potential to meet the need of ensuring that the line does not close, while providing a much lower barrier to entry and exit for any agreement than a full lease of the corridor."