Finance Minister Nicola Willis speaks about KiwiRail cancelling its mega Cook Strait ferry contract with the South Korean shipyard Hyundai Mipo Dockyard.
Video / Mark Mitchell
OPINION
The tide has started to turn on Finance Minister Nicola Willis as KiwiRail paints a grim picture of her decision to call time on its Cook Strait mega ferry project.
She made a bold move late last year to decline KiwiRail’s request for more money after theInter-island Resilience Connection (iReX) project ballooned to almost $3 billion.
The only new thing the Government has announced this year concerning the ferries is appointments to a new ministerial advisory group to consider the future of the Cook Strait service. Nelson Airport chief executive Mark Thompson will chair the group and is joined by two other members - Mark Cairns and Roger Sowry.
KiwiRail bosses told the select committee there was a shortage of second-hand ships and there was a huge queue for getting new ones built.
Indications from ship brokers were that there were only 22 second-hand ships in the world that would meet KiwiRail’s criteria, including the capability to cross Cook Strait’s notorious waters, and none of them were for sale.
They did admit this could change if KiwiRail had an active bid in the market.
The first of KiwiRail's new mega ferries was due to arrive in 2026 before the project was cancelled. Image / KiwiRail
However, it’s not just one secondhand ship that’s needed. Up to three could be required if the existing Interislander fleet is to be replaced as is.
One of the reasons the pool of suitable ships is so small is that KiwiRail wants ships built after 2010, which have redundancy built into their mechanical systems.
The $551 million fixed-price contract with Hyundai Mipo Dockyard (HMD) to build the new ferries in 2021 has proven to be a good deal.
If the same contract were signed today, KiwiRail estimated the cost could increase by as much as 40 per cent.
But Willis has poured cold water on any ideas the ships could be built and sold instead.
“There would be the question of whether there would be a buyer and we did not judge that it would be a good use of public money to be funding a train organisation to be procuring and selling ships,” she has said.
It appears KiwiRail clung to hope right up until the last minute that the deal to build the mega ferries could be kept alive.
Chief executive Peter Reidy revealed two members of his team even visited the South Korean shipyard in January to conduct business face-to-face.
KiwiRail chief executive Peter Reidy announced last week that they have officially started discussions to terminate the contract with HMD. Photo / Mark Mitchell
Reidy left it to the day before the select committee appearance to announce KiwiRail had officially started discussions to terminate the contract with HMD.
KiwiRail’s grim picture of how hard it could be to come up with a Plan B should be treated with a healthy degree of scepticism.
Of course, KiwiRail is going to defend to some extent the project it thought was the best solution for Cook Strait while also acknowledging the Government’s new direction.
The current Interislander fleet isn’t getting younger- Aratere is about 24 years old, Kaitaki is 29, and Kaiarahi is 26, so they are reaching the end of their 30-year working lives.
If there are other further major incidents on Cook Strait, such as the Kaitaki mayday call, before the Government gets a new plan sorted out, Willis will wear the consequences.
Time is ticking.
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
