15 Jan 2013

Report finds Napier-Gisborne rail line viable

10:23 pm on 15 January 2013

A review of KiwiRail's decision to close the Napier to Gisborne railway line has found the route is economically viable.

KiwiRail announced last year that it would mothball the line, saying it was too expensive to fix storm-damaged tracks and the service wasn't making enough money when it was in operation.

Economists at research firm BERL have released a report which scrutinises the figures used to justify the closure.

One of the authors, Ganesh Nana, said it concluded KiwiRail was too conservative in predicting revenue growth in the region and overestimated how much it would cost to fix and upgrade the line.

"The line could be viable if the revenue growth is a lot stronger than what KiwiRail has implied.

"We believe there are opportunities, and indeed probabilities, that that revenue would be there, in particular about the forestry growth coming on tap in that region."

Mr Nana says the line is a very important infrastructure component of the region's economy, and to justify a mothballing decision requires more detailed investigation than KiwiRail has carried out.

KiwiRail chief executive Jim Quinn says the report is too optimistic and makes a lot of assumptions.

"The report talks about $9 million of capital over the next 10 years but omits to talk about the $30 million of maintenance that's got to be done as well ... I just don't think it stacks up, unfortunately.

"What (the report) doesn't solve is where the money comes from to change the calls that have been made.

"What it doesn't solve is how the market can galvanise around that."

Mr Quinn says KiwiRail will continue with its plan to mothball the line, but it will be protected so that if there's a commercial case and money to make the route work in the future, it can be reopened.

The chair of a group opposing the closure says it has been vindicated by the report.

Hawke's Bay Regional Transport Committee chairman Alan Dick told Radio New Zealand's Summer Report programme the closure puts too much strain on State Highway 2 and leaves Gisborne isolated when the road is closed by slips.

He said the Government has a responsibility to ensure there are viable transport alternatives for the export-based regional economies.