Rail deal stalled by bargaining

By PAM GRAHAM

The Government is still to pay up its $1 for Tranz Rail's network because the company's new owner, Toll Holdings, is negotiating hard on land transfers and performance criteria.

The deal, which could have been done as early as December 8 last year, has yet to be consummated. Tranz Rail shareholders gave their approval last week without seeing final details.

Negotiations with Toll were continuing and the two sides were in constant contact, said Chris Mackenzie, a Treasury official in Finance Minister Michael Cullen's office.

Tranz Rail operates the track until June 30 and Mackenzie said the Government had no intention of extending that date.

Toll initially wanted to keep the track but did a deal with a Government eager to get more control over the network privatised together with the operator in 1993.

The Herald understands Toll has been playing hardball on key performance indicators and is seeking to keep areas near tracks being bought by the Government with other assets for $50 million.

Some of these areas are subject to Treaty of Waitangi claims, or were purchased compulsorily by the Ministry of Works. If the compulsorily purchased land is used for anything other than rail the original owner has to be consulted.

Toll seeks to integrate road, rail and shipping and would likely be seeking multiple use.