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KiwiRail will directly fund up to $37.5 million of additional work on the New Ferries project at Picton, covering rail yard upgrades and auto-mooring technology for the new wharf, Rail Minister Winston Peters has announced.
The minister said the decision to appoint KiwiRail as the long-term operator of the Interislander had given the company the confidence to invest its own money in commercial assets. The taxpayer therefore pays no more than the $1.7 billion already allocated, while still gaining the benefit as ultimate owner of KiwiRail.
According to the minister, KiwiRail put forward a package of four items. The first is an upgrade to the connection between its wagon stabling yards and the wharf linkspan. The second skews the arrival and departure rail lines to gain a little more length. The third adds length to the southern backshunt beneath the new Dublin Street overbridge. The fourth is the purchase of auto-mooring units that had been planned for Wellington, to be installed at the Picton wharf instead.
Peters said that analysis of the proposal showed the works could be carried out alongside planned construction without delaying the programme’s completion date, and that they were commercially worthwhile. Rail yard operations become simpler to manage as demand shifts across the year, he said, while auto-mooring lets ships berth faster and more safely and burns less fuel.
The minister framed the arrangement as a continuation of a position set out in July 2026: where KiwiRail or either port wanted to spend its own money on commercial assets while construction was underway, the government would support that, provided the party concerned paid for it, and the works did not delay the project.
He described the government as shareholders in charge of the project and said ministers retain the final say on whether any scope is added. He said disciplined scope control was what had been missing under the previous government, and that KiwiRail and the ports had been told so directly.
The announcement identifies KiwiRail as the party carrying the cost and the minister as the person approving the added scope. It does not set out a construction timetable, a start date for the Picton works, or a breakdown of the $37.5 million across the four items.
For firms in the Marlborough and Wellington freight chains, the practical effect is that a set of rail-side improvements at Picton moves ahead without drawing on the project’s existing Crown allocation. The minister’s account links the yard and line changes to smoother management of rail operations as seasonal demand moves through the year, and the mooring units to quicker, safer berthing with lower fuel use.
For suppliers and contractors, the funding structure is the point of interest. The work is being paid for by a state-owned enterprise from its own balance sheet rather than with new Crown money, and it sits within a programme where ministers have said they will vet any additions to the scope. Any further proposals from KiwiRail or the two ports would face the same test the minister described: the proponent funds the asset, and the construction schedule cannot slip.
The $1.7 billion allocation is unchanged by the announcement. Peters said the Crown gets the benefit of the extra works as owner of KiwiRail despite not contributing further funding.
The New Ferries project covers the replacement of the Interislander fleet and the associated wharf and rail infrastructure. Picton, at the southern end of the Cook Strait crossing, hosts the rail yard and wharf assets affected by this announcement; the auto-mooring units were originally intended for the Wellington side.
KiwiRail’s role as the long-term operator of the Interislander is the basis for the minister’s confidence in the company’s willingness to invest. The release does not state the terms of that operating arrangement or the date on which it takes effect.
The added works will be funded by KiwiRail up to a ceiling of $37.5 million, in addition to construction already planned for the programme.
Source: Beehive
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