KiwiRail’s ability to run service queried

THE InterIsland Resilient Connection (iReX) project to build new ferries and redevelop the ports would not have broken even, even after three decades, while the Transport Ministry has questioned whether KiwiRail is capable of continuing to run the service.

The information comes from a proactive release of dozens of government and ministry briefings and correspondence by KiwiRail yesterday.

The documents revealed that due to spiralling cost — a quadrupling — the project would still be $1.3 billion in the hole after 2050.

The project would have had a positive net value if it was just the ships, but the escalating costs of the port works and terminal infrastructure sank it.

The cost of cancelling the shipbuilding contract is unknown.

The iReX project was set to deliver two railenabled ferries by 2026, cofunded through a deal agreed with the previous government, and then axed by the current government.

It said the cost blowout meant it did not stack up.

The Transport Ministry said a more commercially viable option should be possible if a new approach was taken ‘‘especially by someone other than KiwiRail’’.

‘‘Given the difficulties KiwiRail have had with Project iReX, and the fact they have a range of core rail issues to address, raises the question of KiwiRail’s suitability to run the Interislander business in the medium to long term.

‘‘The Interislander business could be separated into another stateowned enterprise or sold via a trade sale.

‘‘KiwiRail would be expected to contract with this business to provide freight services across the Cook Strait, but how this is achieved would be left as a commercial decision between parties.’’

KiwiRail chief executive Peter Reidy said it was looking at ways to carry on with its existing fleet, or source replacement ships secondhand. It remained committed to operating the Interislander service, he said.