Auckland will gain ownership of 57 new electric trains in return for taking responsibility for repaying a $500 million Government loan over 35 years.

But the loan repayments will in turn be subsidised by the Government through the Transport Agency, starting at 60 per cent before reducing over 10 years to a new financial assistance rate of 50 per cent.

Transport Minister Steven Joyce confirmed the Government will also provide a grant of $90m to further sweeten a funding and ownership deal which he signed at Henderson railway station this afternoon with Auckland Mayor Len Brown.

Annual repayment costs of the loan will amount to about $34 million, with Auckland ratepayers paying about half of that.


Mr Brown expected the new electric fleet, to be introduced by the end of 2014, would lead to a doubling of existing patronage of 10 million passenger trips a year and put Auckland in pole position for further modernisation through a $2.4b central city rail tunnel.

The agreement, which has been reached before a supply and maintenance contract expected to be announced by the end of this month, means Auckland will own more electric trains than originally planned.

It replaces an earlier plan for the provision of just 38 three-car electric multiple unit (EMU) trains, to be supplemented by 12 electric locomotives which would have had to haul existing carriages on Auckland's southern railway line.

Mr Joyce said the package now agreed to would provide full electrification on all lines "so we have a single homogenous electric fleet right through the city and I think that's a very exciting result''.

He said ownership of its own fleet, with a new maintenance depot, would give the city greater independence "and it means passengers more importantly can look forward to faster and more reliable service''.

Mr Brown said the all-EMU fleet would cost less over its life-span than the original option and noted that Auckland had expected to pay the full bill through a regional fuel tax, rather than splitting the costs with the Government.

The Government through KiwiRail is also almost half way through electrifying and resignalling the rail network out to Papakura in the south and Swanson in the west for a further $500m.