[Vic/NZ]West Coast Rail bid for NZ rail

["James C." <james_ccj@optusnet.com.au>]

http://www.heraldsun.com.au/common/story_page/0,5478,1937038%255E664,00.html

Geelong bid for NZ rail
By GEOFF EASDOWN
27apr01

VICTORIAN-based West Coast Railways is fighting a David versus Goliath
battle for the right to operate in New Zealand.

The small Victorian operator is fighting the French state-owned enterprise
Resseau de France (RFF) for the right to operate Tranz Rail's long-distance
passenger service.
A West Coast Railways takeover would effectively double the size of the
Victorian operator, which runs a three-times-a-day, 260km service between
Melbourne and Warrnambool.

RFF, which owns the French rail network, is a $40 billion operation
servicing about $260 million a year in debts.

Transport analysts say West Coast and RFF will be required to pay between
$15 million and $25 million for the Tranz Scenic service.

Tranz Rail employs a staff of 150 and operates seven routes across New
Zealand.

It is owned by Canadian National and US-based Wisconsin Central Railways.

A decision on the preferred buyer is expected within the next few days.

West Coast executives last night remained tight-lipped about their
across-the-Tasman bid which would take the Geelong-based company into a much
bigger league.

Chief executive Don Gibson declined to comment.

But the Herald Sun learned he has spent the past five months negotiating the
group's attempt to win access to routes in New Zealand.

Told details of his bid had leaked, a surprised Mr Gibson later responded
with a curt "no comment at the moment."

Analysts in Auckland believe Victoria's West Coast could emerge the winner
because RFF struggles to deal with debts said to amount to almost $50
billion.

As a state-owned group, RFF has to operate within strict government
guidelines which requires it to show significant returns on capital.

By comparison West Coast Railways operates on one route, owns its own
rolling stock and workshops and is contracted to the Victorian Department of
Infrastructure.

It was formed in 1993 when VicRail was deregulated. By improving service
standards, West Coast has increased patronage on the Warrnambool-Melbourne
route and returned profits each year since it started.

New Zealand's Tranz Rail has struggled to run passenger services profitably
in the past year, because of high fuel and electricity costs.

The group reported a $5.3 million loss in the six months to December 2000,
compared with a $15 million profit in the 1999 December half.

Weekend newspaper reports in New Zealand said the real attraction for
foreign bidders was likely to be the soon-to-be-sold-off Wellington and
Auckland metropolitan services which are still government owned.

The group which takes the long distance Tranz Scenic service is likely to
become a favoured bidder for the more profitable metropolitan commuter
services.



Cheers
James