Government provides KiwiRail $35m to keep electric freight service

Transport Minister Phil Twyford. Photo / File

The government has provided KiwiRail an extra $35 million to restore its fleet of ageing electric locomotives on the North Island's main trunk line.

The money will be used to refurbish the 30-year-old trains during the next four years. Only eight of the units are currently operational and they had been due to be decommissioned in March 2019 following a decision by the KiwiRail board in December 2016.

Deputy Prime Minister Winston Peters – also Minister of State-owned Enterprises - said refurbishing the trains, rather than replacing them with modern diesel units, was the right long-term decision.

"By refurbishing these locomotives here, we're creating jobs in KiwiRail's Hutt Workshop and supporting our local rail industry. It just makes sense," Peters said in a joint statement with Transport Minister Phil Twyford and associate minister James Shaw.

The $35m refurbishment cost is almost three times the figure touted by unions and other groups who had argued against ending the electric service. It is additional to funding the government has already announced for regional rail upgrade projects and commuter service upgrades.

KiwiRail, starved of investment capital for decades, had favoured replacing the electric units with modern diesels as part of a strategy to improve reliability and speed on the Auckland to Wellington link and simplify its fleet. The electric units run only between Palmerston North and Te Rapa and the time taken to change engines increases travel time.

The company had planned to keep the electric overheads in place and maintained to enable the decision to be revisited.

Acting chief executive Todd Moyle said the 2016 decision had not been taken lightly and reflected the funding available to the company at the time.

"The government has shown a clear commitment to rail, including NZTA funding business cases for further electrification of the Auckland rail network from Papakura to Pukekohe and adding a Third Main line in Auckland," he said today.

"KiwiRail has been talking with the government about the possibility of further electrification and is also exploring the use of other fuel sources."

Electrification of transport and industry are considered key to meeting the country's 2050 emission targets. Rail is also an area where lower-emission fuels, including natural gas, liquefied natural gas and hydrogen are being trialled internationally.

KiwiRail had argued that using modern diesels as part of a more efficient rail freight service would have done more for emissions by taking more trucks off the country's roads.

Buying new electric units would have taken several years and they would have also been more expensive than new diesel units.

Electrifying the rest of the route between Auckland and Wellington, another option then favoured by parties now in government, was estimated at more than a $1 billion and would have still required diesel units through the rest of the North Island.

Moyle noted the electric units are still breaking down about every 30,000 kilometres – compared with company's fleet target of 50,000 kilometres.

He said the restoration work, which will also include upgrades of the electronic control systems, will extend their lives by about 10 years.

The work will create between four and eight extra jobs at the firm's Hutt workshops, he said.