The dramatic budget blowout was fuelled by the portside infrastructure needed for the larger rail-enabled ferries, including new terminals. A $551 million fixed-price contract to build the new ferries was signed with Hyundai Mipo Dockyard in 2021.
Reidy told Kathryn Ryan on RNZ’s Nine To Noon KiwiRail had a close relationship with Hyundai Mipo Dockyard and the state-owned enterprise had been in contact with the shipbuilder in the last 24 hours.
Hyundai was very keen to work through options, Reidy said.
“We could still, for example, build and sell the ships. We could still maybe turn it into a different model and option.
“We’re looking to work firstly with our board and shareholders then we’ll sit down with Hyundai and look at the options like: is there a lease option rather than purchasing?”
This is a shift in position from Wednesday when Reidy said the contract would be terminated.
Asked by Ryan whether the type of ship could be renegotiated with Hyundai, Reidy said he believed it could.
But Reidy stressed smaller ships only reduced the portside infrastructure costs by 7 per cent ($150m).
The key reason the portside infrastructure was so expensive is because it had a 100-year resilience design life, Reidy said.
He said costs could be brought down by reducing the design to a 20-year life and KiwiRail was currently working out these details.
“So the question for New Zealand is do we want infrastructure resilient for the future or do we cheapen it up now? Which we’re happy to do, and that is an option that we’ve got on the table.”
The Interislander ferry Kaitaki heads into Wellington. Photo / Marty Melville
Asked whether, in that case, the deal could be rescued and the mega ferries could still be purchased, Reidy described the current situation as a “pause”.
“If we can’t reduce the terminal costs ... then we need to look at other options but we do know that smaller ships don’t reduce the infrastructure costs significantly.”
When pressed again by Ryan as to whether the mega ferries could stay in the picture, Reidy said: “That could be an option, yes.”
Reidy said he also wanted to look at alternative funding and financing options.
How much has been spent so far on the mega-ferry project?
About $400m has been spent to date on the iReX project.
This includes $78m on the ships – for design, procurement and the initial deposit for the build- and $276m on the two terminals – for design and consenting and early construction work.
CentrePort’s 2023 annual report said KiwiRail contractor JFC had spent the past 12 months preparing the Wellington terminal site for main construction works.
“This included levelling Kaiwharawhara Point, which will become the new passenger vehicle marshalling yard where private vehicles wait to board the ferry,” the report said.
“KiwiRail also worked with CentrePort and Ceres to demolish the old arrivals building which closed in 2019 due to earthquake risk.”
CentrePort chief executive Anthony Delaney said while the iRex project had stopped, the land where initial work was happening could still be used when a new plan is confirmed.
The port will continue to work proactively with stakeholders to find a new solution for the site, Delaney said.
“This solution needs to be something that meets the needs of New Zealand’s freight and supply chain and the public.”
KiwiRail ‘not walking away’ from early works on new terminals
Port Marlborough’s 2023 annual report said enabling work for the iRex project started last year.
“A temporary terminal building was constructed and opened, and the construction of new Port Marlborough commercial jetties began in the course of the financial year, to accommodate those charter and fishing vessels displaced by the project, adjacent to the old terminal building,” the report said.
Reidy told the Herald KiwiRail is working through the implications of the Government’s funding decision for staff.
KiwiRail would not walk away from the work that has been started in Wellington and Picton, he said.
“We are developing a plan to ensure things are in good shape during the summer peak so the ferries and Picton town can operate efficiently.
“We are also developing next steps for our work in the two terminals and will keep our partners and the community informed as things progress.”
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.
