Rail electrification delay fears raised by ARC

The electrification of Auckland's rail network could be delayed further after the Government announced it was investigating a different funding option to buy new trains, warns the head of Auckland Regional Council.

Transport Minister Steven Joyce said yesterday that he was considering using a public private partnership (PPP) model to buy new rolling stock. Mr Joyce has just returned from Australia and he said PPPs had been used there on a number of occasions to fund passenger rail stock, including an agreement to secure 78 new commuter cars worth A$2 billion ($2.55 billion) for Sydney.

ARC chairman Mike Lee said he suspected the announcement was an ominous sign for the rail network before today's Budget.

"I would say this is a signal ... of a lack of electrification funding in the Budget."

Mr Lee warned that such a plan was discarding an expensive and time-consuming plan which was already under way, and would delay electrification further.

"The international tender process for 140 electric rail cars that [Auckland Regional Transport Authority] launched last December and was due to go into its final stage early in May would in effect be torpedoed."

Mr Lee said PPPs were discarded as a funding plan for rail in the late 1990s and while upfront costs were less the ultimate cost to the Government was higher.

Mr Joyce told the Herald last night that the PPP investigation was just one option being juggled by the Government, and electric rail was still on track for completion in 2013.

"We are still four years away from the target date and we can do this alongside the work that was already being done."

He said the Government was committed to electrification and PPPs were one way of providing value for money by reducing the upfront cost to the public purse and shifting "a reasonable element of financial risk" away from the public sector.

The other options being mooted for purchasing trains were for the Crown to increase investment in KiwiRail so it could buy the trains or for KiwiRail to borrow the money, with the Government providing a direct passenger subsidy until patronage increased.

Mr Joyce has asked Ministry of Transport officials to look into how PPPs might work in the New Zealand context and expected a report in a few weeks.