Tranz Rail does u-turn on sale of commuter trains

Tranz Rail has thrown a spanner into negotiations over a joint venture to run Wellington's commuter service, Tranz Metro, by saying it may want to hang on to the commuter trains after all.

The transport company announced in late 2000 that it was determined to sell the service, but has done a u-turn since a change in the shareholding of the company.

The Wellington Regional Council is on the verge of selecting a joint-venture partner to bid for Tranz Metro.

But on Monday, Tranz Rail said it was less keen to sell, and whether it would do so would depend on price.

One potential operator of the train service suggested that Tranz Rail's comments could be nothing more than talking up the price.

Tranz Rail strategy and development manager William Peet told a Wellington Chamber of Commerce meeting: "It depends on the price ... At a low price, no, it's not for sale."

The regional council says it is open to a deal with Tranz Rail, but only if it meets criteria already set for its own planned joint venture: that any deal is a long-term commitment, that the company is ready to write big cheques to replace ageing trains, and that it will commit itself to some form of transparency so the council can see how its money is spent.

Tranz Rail is not committed to all that yet. Wellington's commuter trains are heavily subsidised, both by the regional council and by the Government through Transfund.

Anyone ending up in control of the trains, and wanting long-term funding, would need to have a deal with the regional council.

Tranz Rail change manager Jeff Heisler told Monday's meeting that management changes meant the company had been able to improve its efficiency in a way it had not expected.

The emphasis had been on freight services so far, and attention was now going back on passenger services.

Tranz Rail's change of position may be linked to its change in shareholding.

The major shareholders that ordered the fire sale, Wisconsin Rail and Fay Richwhite, have since sold their stakes and some analysts question whether Tranz Rail wants to cut off so many revenue streams.

It has already resumed a half-share in its former tourist service, Tranz Scenic, after earlier sale plans.

The council is still in talks with three potential joint-venture partners: Connex, Stagecoach and Transdev.

Stagecoach declined to comment and Connex could not be reached.

Bruce Kohn of Transdev said Tranz Rail's comments had an element of "pre-negotiation price-setting".

- NZPA