KiwiRail is in talks with a South Korean shipbuilder to terminate a $551 million contract to build two larger Interislander ferries.
This follows the Government’s decision last year to not provide further funding for the Inter-island Resilient Connection project.
At the time Finance Minister Nicola Willis said KiwiRail had asked for a further $1.47 billion to address cost escalations. The previous government had agreed in-principle to cover this but the coalition Government was not prepared to foot the bill.
These escalations included costs related to the associated harbourside infrastructure to accommodate the new ferries.
KiwiRail said it was unable to proceed with the project without the Government money.
The new ferries were expected to be more environmentally friendly, and in 2021, the contract was signed between KiwiRail and Korean company Hyundai Mipo Dockyard to fulfil the project.
The 2021 deal reportedly followed four years of research and planning. The delivery of the two new ferries was set for the coming years, but work had not started.
The Government will appoint a Ministerial Advisory Group to provide independent advice and assurance to Ministers on the future options for a Cook Strait connection.
The Ministry of Transport will also lead an assessment of long-term inter-island service requirements.
Replacement options for the Interislander ferries are expected to be part of these broader reviews and KiwiRail said it will be working with customers and the international shipbrokers on options to source suitable replacement ferries.
“KiwiRail will be working closely with the Government, MAG and all stakeholders on options for a safe, reliable and resilient Cook Strait connection to transport freight and passengers,” said chief executive Peter Reidy.
“KiwiRail would like to thank our people, contractors, our port, Mana Whenua and union partners, and all those who have worked tirelessly on this project up to this date, but, unfortunately, we cannot proceed without further Government funding.
“We respect the Government’s role as shareholder and funder to make this decision.”
Reidy said KiwiRail’s focus is on providing the safe, reliable, and enjoyable service their customers expect.
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