Political parties outside Government say any move by KiwiRail to sell its passenger service would be privatisation by stealth.
The state-owned enterprise is considering offers to sell TranzScenic or to partner with a company.
TranzScenic consists of the Coastal Pacific, TranzAlpine, Northern Explorer and Capital Connection passenger services.
KiwiRail chief executive Jim Quinn says it is looking to either partner or divest the scenic business.
"We're just working through what offers are viable and whether we're happy with those, and I would expect to close that process down over the next month or so."
New Zealand First says the move is privatisation by stealth, while Labour says any sale of TranzScenic it would be part-privatisation of a state asset.
The Government says any move by KiwiRail to sell its passenger division is not an attempt to partially privatise the SOE.
Finance Minister Bill English told Parliament there was nothing wrong with KiwiRail looking for other parties to help with its passenger business.
He says KiwiRail's predecessor made similar transactions in the past, such as selling Metrolink to regional councils.
Mr English says the Government is investing $4.5 billion in KiwiRail over the next five years.