Refusal of KiwiRail to extend timeframe for finalisation of a lease of the Napier Gisborne Railway

Don Selby, Chairman of Napier Gisborne Railway Ltd (NGR), advisers to the Hawke’s Bay Regional Council on the options for reopening all or part of the mothballed Gisborne to Napier railway, expressed disappointment that KiwiRail has advised today that it will not grant an extension of time to the Council to finalise a lease of the line.

Mr Selby notedthat KiwiRail was aware that NGR was working with the Council to prepare a business case for the total or partial reopening of the mothballed line.  KiwiRail was aware that the Corporate and Strategy Committee of the Council was meeting on 18 February and undertook to prepare a draft Heads of Agreement for consideration by the Council.

A draft document was received by the Council mid-afternoon on 17February which was insufficient time for the Council and its advisers to review the document and respond.  At the Corporate and Strategy Committee meeting on 18 February NGR advised the following:

  • There appears to be a viable case for reopening the line from Wairoa to Napier for the purpose of hauling export grade logs to Napier Port.
  • There were a number of matters outstanding relating to the draft Heads of Agreement submitted by KiwiRail that must be resolved before the Council could enter into a 30 year lease with KiwiRail.
  • Unless these matters were resolved it was most unlikely that any railoperator would be prepared to commit capital to the project.

TheCommitteerecommended to the full Council that it advise KiwiRailthat the Council agrees in principle to a lease of the line subject to the terms of the lease and a number of operational matters involving KiwiRail and a rail operator being resolved to the satisfaction of the parties.

The Committeerecommended that the Council seek a reasonable extension of the time to resolve the remaining issues that, with continuation of the goodwill and cooperation by all parties,should enable a successful conclusion to be agreed.

The Committee recommended a final deadline of 30 June 2015 for resolving all outstanding matters and the Council securing a rail operator with sufficient funding to undertake the proposed rail service.

These recommendations were ratified by the full Council on 25 February 2015 and communicated in writing to KiwiRail on 27 February 2015.

Between 27 February and today we understand that there have been only two high level meetings of the Council Chairman and Chief Executive with the Chief Executive of KiwiRail.  To the best of our knowledge at no stage during these meetings was there a discussion of the substantive issues outstanding.  The expected next stage in the process was a meeting to discuss the matters detailed in the report to the Corporate and Strategy Committee on 18 February and the draft KiwiRail Heads of Agreement.  No date has yet been set by KiwiRail for such a meeting.

This decision by KiwiRail is very disappointing in view of the decision by the Council to proceed as quickly as possible to resolve outstanding issues.  Despite the decision NGR remains ready and committed to work with the Council and KiwiRail to find an acceptable outcome.




For further information please contact:

Don Selby 027 438 8472

Project to lease disused Bay railway makes fresh progress

(“Hawke’s Bay Today” – Fri 27th February 2015)

By Simon Hendery

Hawke’s Bay Regional Council’s plans to lease the mothballed Napier-Gisborne rail line appear to be on track after it was revealed this week the chief executive of KiwiRail intends visiting the region to discuss the proposal.

Last year the council set aside $5.46 million to potentially part-fund the resurrection of a freight service on the line.  Last week its corporate and strategic committee voted its “in principle” support for negotiating a lease with KiwiRail so the line could be used to ship logs from Wairoa to Napier Port.

That decision was ratified at a full council meeting on Wednesday where Regional Council chairman Fenton Wilson said he wrote to KiwiRail chief executive Peter Reidy last week to confirm the council’s interest in leasing the line.  “He wishes to come to the Bay and meet with me and see how this goes forward.”

In earlier correspondence, KiwiRail had given the council until March 1 to make a decision on whether it wanted to take the lease.

Mr Wilson said he had been playing “telephone tag” with Mr Reidy, so had not been able to clarify the company’s thinking, but he was confident negotiations could continue past March 1.  “The indication (from the council) is we’re interested in starting a formal negotiation around the lease of the line,” he said.  “It’s not the end of it but by the first of March we had to decide whether we were interested in leasing the line and we’ve indicated we are.”

The council had also tasked Mr Wilson with liaising with all groups interested in the proposal “to enhance the prospects of the

initiative succeeding”.  Those parties include the Napier Gisborne Rail Group, which had been attempting to find corporate funding for the proposal, Napier Port and other transport operators.

A KiwiRail spokeswoman said a meeting to discuss the issue was expected to be arranged.




Napier – Gisborne Rail Update

Thursday March 12, 2015

Hawke’s Bay Regional Council Chairman Fenton Wilson says he’s hugely disappointed the council hasn’t been given an extension of time to investigate the possibility of leasing the Napier to Gisborne Rail corridor.

KiwiRail has today written to HBRC declining its request for more time in which to confirm its interest in leasing the Napier-Gisborne rail line.

The line was mothballed in December 2012, after storms earlier in the year caused severe damage, which is expected to cost close to $4 million to repair. Council commissioned a business case late last year on whether leasing the line was a good investment for the Council and the region.

Fenton Wilson thanked KiwiRail for the opportunity to consider the lease of the Napier to Gisborne rail line, recognising the importance of the security of that corridor to the region.

He acknowledged the work and passion of the Napier Gisborne Rail Group personnel, who he says will be extremely disappointed with this decision.

He says the council strongly supports KiwiRail’s intent to keep the line mothballed at this time rather than fully close it in order to provide for potential freight increases. Mr Wilson says this aligns with HBRC’s objective of retaining options for access into and out of the northern part of our region.

Media contact

Fenton Wilson, HBRC Chairman | P 027 4984 483

Liz Lambert, HBRC Interim Chief Executive | 027 428 5618

Helen Shea, Communications Specialist | P 06 833 8085, 027 662 5953

Support in principle for Napier-Wairoa rail line proposal

Source : Hawkes Bay Regional Council.

Original Article here

Wednesday February 18, 2015

Hawke’s Bay Regional Council’s Corporate & Strategic Committee is recommending Council supports in principle a proposal to lease the mothballed Napier to Gisborne Rail line from KiwiRail.
The line was mothballed in December 2012, after storms earlier in the year caused severe damage, which is expected to cost close to $4 million to repair. Council commissioned a business case late last year on whether leasing the line was a good investment for the Council and the region.
An interim business case was presented to today’s Corporate & Strategic Committee meeting recommending Council supports the opening of the rail service from Napier to Wairoa to move logs from a hub in Wairoa to Napier Port, subject to a number of conditions, including lease terms which are suitable to both KiwiRail and HBRC.
KiwiRail set a deadline of 1 March 2015 for the Council to make a decision on whether to lease the line, and at today’s meeting Councillors agreed in principle.
The Committee is recommending a final deadline of 30 June 2015 to resolve all outstanding issues between KiwiRail and HBRC, confirm an operator and private investors and to get a more definitive indication of how much support there is for the proposal from Wairoa forest companies.
It was also recommended Council Chairman Fenton Wilson liaise with all interested parties, including Council’s investment company HBRIC Ltd, the Napier Gisborne Rail Group, Napier Port, and other transport interests and KiwiRail to enhance the prospects of the initiative succeeding.
The recommendations will be considered at next Wednesday’s full council meeting.

Businesses will need to commit to rail now or venture will fail

Source: Gisborne Herald – Friday 28th November 2014

News this week that KiwiRail has conditionally agreed to lease the Napier to Gisborne rail line to the Hawke’s Bay

Regional Council, and that HBRC will now commission a business case analysis for a proposed short-haul rail operation,

is exciting for all those who want the line reopened.

The developments are testament to the efforts and passion of the six men behind the Napier-Gisborne Shortline Rail

Group, including Gisborne transport operator Steve Weatherell – who was instrumental in getting loads of squash railed

south before the washouts that led to the line being mothballed two years ago.

Their confidence in the future prospects of rail for our two regions will now be tested over the next three motnhs. HBRC

and other potential investors, as well as KiwiRail, will want to see significant freight commitments for the line – not just

hopes and sincere intentions.

It is a reasonably tight timeline and it needs to be as the rail corridor is a significant asset that has lain idle for too long.

HBRC has already shown its support for reopening the rail line by setting aside $5.5 million to invest in this venture – which

its proponents say will need another $10-12m of private funding – in its draft long-term plan. Public consultation on that

decision is yet to take place and will need to follow the due diligence process, which HBRC wants completed by end of


KiwiRail has given HBRC until March 1, 2015 to respond to the lease offer. That appears to be a deadline for completion

of the business case, and the council indicating its position, rather than an actual agreement. A deadline of June 30, 2015

has been set for the project by the regions’ mayors, which ties in with the completion of council long-term plan processes.

Hawke’s Bay and Gisborne businesses with potential freight transport needs will be visited once again and, if they want

to see the rail line reopened, they should sign on the dotted line. It will take lots of freight to make this venture work, and

if that is not forthcoming this proposal won’t get off the ground.

Labour MP’s Whaitiri, Nash ‘delighted’ at decision to lease rail line

Source: Gisborne Herald – Thurs 27th November 2014

KiwiRail’s decision to allow the Hawke’s Bay Regional Council (HBRC) to lease the Napier to Gisborne rail line is welcomed

by Labour’s East Coast Members of Parliament Meka Whaitiri and Stuart Nash.

Mrs Whaitiri, MP for Ikaroa-Rawhiti, said world-class transport infrastructure was vitally important to attracting industry to

the region.

“If we are ever going to provide jobs and opportunities to our people up and down the Coast, then we need to attract the

type of industry that processes raw commodities like logs and foodstuffs.

“These are the type of industries that need reliable access to a containerised export port.”

Tauranga was 400 kilometres and the Port of Napier 200km from Gisborne.  Reopening the line is a long term commitment

to the region and makes sound economic sense.”

Reopening the rail line was something she and Mr Nash, the MP for Napier, campaigned hard on during this year’s General


A significant number of people within the region understood the economic proposition that rail brought to the district.

“We are delighted by this decision and are both confident the HBRC will end up being the saviour of this important piece of

regional infrastructure,” said Mrs Whaitiri.

Mr Nash said leasing the line to HBRC, was an innovative approach to an issue, which had polarised the East Coast.

“This is a fantastic opportunity for us to now take control of our own future. If the HBRC, can make it work, then this is a

fantastic outcome for those who understand the value proposition that rail provides.”

Rail back on line…

Source: Wairoa Star – Tuesday 25th November 2014

KiwiRail agrees to lease.

KiwiRail has agreed to lease the mothballed Napier to Gisborne rail line to Hawke’s Bay Regional Council.

After nearly two years of regional pressure the lease offer has finally been made, subject to a number of conditions.

The line was mothballed in December 2012, after storms earlier in the year caused severe damage, particularly

around the Beach Loop area on the Northern side of the Wharerata hills.

Repairs are expected to cost close to $4 million.

The next step is for the regional council to consider KiwiRail’s offer to see if it makes sense as an investment.

It has until March 1, 2015 to respond to KiwiRail.

Hawke’s Bay Regional Council chairman Fenton Wilson is excited KiwiRail has given the council and the East Coast

this chance.

“Our challenge now is to seek regional council endorsement to spend some money on due diligence which will

include geo-technical work on the washout and a final engineering inspection and report.  Then we will review the

Napier-Gisborne Railway business case to ensure the numbers are accurate and realistic.

“We have another monthly meeting in three-weeks and I would hope in that time we would have the beginnings of

the answers to many of these issues,” said Mr Wilson.

“The main news is that KiwiRail has given us a chance. There’s a lot of work to do in a short time-frame to meet

their deadline.”

“With regard to the Gisborne Distrcit Council we have not had any formal discussion about what the final funding

arrangements might look like.”

“I’m sure they are talking to their major businesses about what success looks like though.”

The regional council will meet tomorrow to discuss the proposal.

Wairoa Mayor Craig Little described the announcement as fantastic news”.

“Providing the offer is viable then this is a great way to get the ball rolling.

“This is the outcome the regional leaders wanted when we all met in Wairoa with potential line users earlier this month.

“There is no reason why the Wairoa to Napier part of the line can’t begin operating again straight away.

“For us that could mean a land-based road/rail hub or port based in Wairoa.”

Mr Little hoped the KiwiRail offer was a fair one and that KiwiRail passed on the same opportunities to the regional

council that they had received themselves.

Napier-Gisborne Railway Shortline Establishment Group chairman Don Selby said the consortium welcomed this

progress and hoped the regional council sees fit to follow it through.

“There’s a lot of planning and organisational work to do and we are just waiting for the green light.”

“We are still very keen to get on with the job and provide the area with a reinstated rail service,” Mr Selby said.

MP ‘extremely happy’ at news …

Wairoa-Napier Member of Parliament, Stuart Nash said this was great news.

“The fact that KiwiRail is prepared to think outside the box and explore partnerships with engaged local authorities

who have skin in the game is a real bonus for the East Coast.”

“While it isn’t a certainty that the Regional Council will reopen the Napier-Gisborne rail link, the East Coast has been

given a lifeline and I am extremely happy that this option is now able to be worked through.”

“I am 100 per cent supportive of this iniatiative,” Mr Nash said.

Council to spend $250k on Napier-Gisborne rail

Source: Hawke’s Bay Today – Tuesday 25th November 2014

by Simon Hendery

New life has been breathed into the campaign to reopen the Napier-Gisborne rail link with KiwiRail offering to lease the damaged line to Hawke’s Bay Regional Council.

The council is tomorrow expected to approve spending $250,000 to develop a business case to re-establish a freight service on the line.

A private sector investment of about $10 million to $12 million would then need to be found on top of a $5.46 million provision the council has earmarked for the project in order for it to get off the ground.

Earlier this year, the council asked the Government to repair the damaged line – at an estimated cost of between $3.7 million and $4.5 million.

The council was approached by the Napier-Gisborne Railway Shortline Establishment Group (NGR) who wanted it to become a shareholder in a rail freight operating business using the line.

But the Transport Minister at the time, Gerry Brownlee, refused the request for funding, saying the council’s plans to see the line put back into service did not make economic sense.

However, in a letter to the council last week, KiwiRail chief executive Peter Reidy said the company was willing to lease the line to the council, but would not commit any funding to the work required to reopen it, or for ongoing maintenance.

KiwiRail has given the council until March 1, to finalise its business case for the line, after which, Mr Reidy said in his letter, the company “will need to resume its process to lease the line for alternative uses, or fully close (it)”. The line has been mothballed since late 2012.

Under a “revised proposal” from NGR, to be considered at tomorrow’s council meeting, the rail group suggests paying the council up to $300,000 a year to sub-lease the line, depending on the cost of repairs.

Councillor Alan Dick, chair of the regional transport committee and an advocate for the re-opening of the rail line, said the revised NGR proposal reduced the risk for the council taking a stake in the freight business.

The group was confident it could raise the capital required to acquire locomotives, rolling stock and other assets to get the business up and running, but was looking to the council to be an “infrastructure provider” through the KiwiRail leae, Mr Dick said.

“There’s a lot of work to be done and there are some challenges but we’re confident that we can get there.

Napier Labour MP Stuart Nash, an advocate for re-opening the line, welcomed KiwiRail’s move to offer to lease it to the council. He said the company’s decision “recognises the tenacity and persistence” shown by Mr Dick, NGR and other rail supporters.

“I’m delighted by this decision and I am confident the HBRC will end up being the saviour of this important piece of regional infrastructure,” Mr Nash said.

Earlier this month the mayors of Napier, Hastings, Wairoa and Gisborne agreed to fully support the regional council’s efforts to secure a lease of the rail corridor.

At the same time, Parliament’s Transport and Industrial Relations Committee is considering a request to fund a feasibility study into the possibility of converting the rail corridor into a tourist cycling trail.

The history and costings

Source: Wairoa Star Thursday 20th November 2014

The mothballed Napier-Gisborne rail line is the northern section of the Palmerston North/Gisborne line. It was built in the

period from the 1920’s to 1940’s and opened in 1943. It was one of the last main line rail constructions in New Zealand and built

to high engineering standards.

In March 2012 the line was damaged in the Beach Loop area with four washouts over a 4.7km section.

Repairing the culverts would cost $3.30m to $4.29 million with the Big Hut slip the most expensive at $750,000-$950,000

and expected to take six to nine weeks to complete. Repairing the south end tunnel was estimated at between $670,000-$870,000

and could take up to 10 weeks.

The May 18, 2012 KiwiRail Napier-Gisborne Line report said all four washouts occurred because culverts were inundated with flood


At the time of the weather event in March 2012, the culverts in this section of track were code-compliant and were last maintained

in May 2011, according to the report.

Detailed culvert inspections were performed once every six years and focused on the structural integrity of the culvert, inlet and

outlet. The detailed inspection also looks at the stream condition as well as blockages and debris build-up. The detailed inspection

was supported by a weekly track inspection.

After a severe weather event a special inspection was carried out in the affected area. The report concluded that because of the

susceptibility and climate inspections could be annual rather than six-yearly.

This would add a further $6000 to the inspection cost per year. The maintenance work found from the extra inspections was

estimated to cost between $40,000 and $70,000 per year.

The KiwiRail report recommended reducing line washouts due to slips and dropouts by undertaking prudent engineering works.

It said the Wairoa to Gisborne section was more vulnerable than the Napier to Wairoa section and this was reflected in the repair

estimates. In this section alone there were at least 13 embankments of similar height to those that failed and might pose a similar

risk of embankment collapse due to upstream ponding.

It noted another high-risk area needing significant work was the section of the line alongside the Kopuawhara River. A combination

of river protection, slope stability and drainage work was required along this stretch of the corridor. Removing these risks was costed

at between $0.8m to $1.5m.

The KiwiRail repair bill included a nominal amount for the Napier to Wairoa section to acknowledge there were many rivers that the

railway ran close to.

Taking into account past history, the report said major infrastructure outage due to weather every two to four years could be

expected on this line. The geography of the line made it difficult to eliminate damage against such events.

But the report stated improvements at risk areas and maintaining drains, culverts and slopes after severe weather events would limit


Getting back on the rails

Source: Wairoa Star Thursday 20th November 2014

The future use of the mothballed Napier-Gisborne rail line has inspired a road deviation proposal, a private rail shortline consortium and rail bike proposals.

Now another player in the transport world has suggested utilising part of the line could be more productive than reinstating the whole line.

In a discussion document submitted to the Hawke’s Bay Regional Council on its ‘Big Six’ strategic priorities, Napier Port chief operating officer Chris Bain said any rail infrastructural improvements should be demand-tested with a strong emphasis on Napier-Wairoa.

“If there is any case for sustainable rail capacity investment Napier-Wairoa cargo opportunities are likely to comprise proportionately more of the cargo than those of Gisborne origin.”

“In other words, Napier-Wairoa cargo opportunities may more readily meet return-on-investment criteria where the addition of Wairoa-Gisborne coverage may not,” he said.

He saw forestry product as the prime opportunity saying whoever operated the rail needed to make a compelling case to log exporters to have the freight moved by rail instead of only by road.

“The case for change means moving from 100 percent road use to a mix of road and rail. Additional handling costs transferring product to rail will need to be overcome.”

He said the journey between Wairoa and Napier was apparently hard on trucking gear and there may be economic sense to using rail from Wairoa to the Napier Port.

“The key issue is whether there’s sufficient committed cargo for the sustained use of rail. If there is, a Wairoa hub may be possible.”

“It could mimic similar rail-based operations which serve ports, such as in Wanganui,” Mr Bain said.

Hawke’s Bay Regional Council chairman Fenton Wilson said the Wairoa-Napier link was the easy step, but in reality long-term success of the service depended on the Gisborne link.

“This enables the resumption of containers and other bulk products, not just logs, which is the main Wairoa opportunity.”

“The unanimous support from the mayors supporting the regional council in its ambition to lease the line is encouraging.”

Chairman of the Hawke’s Bay Regional Transport Committee Alan Dick said there was evidence the line was viable in the long-term, if it operated between Napier and Gisborne because the Gisborne containerised produce and other trades were growing substantially.

“This will supplement the log harvest, which will be intense for the next 10-12 years, but is expected to decline to lower levels after that until the next harvest cycle.”

“This ensures we don’t put all our eggs in one basket and means the line is more sustainable,” Mr Dick said.

Another proposal to create a deviation for State Highway 2 along part of the mothballed rail corridor was also discussed at the regional leaders’ meeting in Wairoa earlier this month.

Spokesman for the group, local farmer Rex McIntyre said they had received a positive response in Wairoa and from most Gisborne transport operators since they floated their proposal at the leader’s meeting.

The former Hawke’s Bay Regional Council and transport committee chairman said people were keen to find out more details and how it could work.

The new route from Sandy Creek to Eskdale would open up two tunnels and include a new viaduct near the existing   Waikoau rail viaduct as well as another new viaduct at Waikare and a bridge over the Esk River.

Mr McIntyre said trucks made “just-in-time” economics possible for East Coast businesses and delivered everything from big warehouses to local businesses in a tight timeframe. The gains made in fuel and time savings from the alternative route were greater than the cost of the $12.50 levy, he said.

Other improvements on State Highway 2 could include a Waihua Bridge upgrade so it could take the heavier class of transport; and an elimination of Ohinepaka overbridge and upgrades for two to three bridges north of Wairoa to take a full 62-tonne container straight to the Port of Napier.

Mr McIntyre said feedback was that people saw the alternative route as an opportunity to open up Wairoa. “If there is enough support we will hold a meeting in Wairoa and make a full presentation of the proposal,” Mr McIntyre said.

They hope to arrange a meeting with the Transport Minister Simon Bridges to discuss their proposal.