NZ Government to Take Back Track

["Bill Guest" <bill.guest@paradise.net.nz>]

Only 8 years after the heralded privatisation of railways in New Zealand,
the government has announced that it is to negotiate the repurchase of the
infrastructure.

Tranz Rail bought the whole railway in 1993 for less than $NZ400M, based on
a ground lease for the corridor of $NZ1 per annum. The original investors
and managers have done very well, having received significant dividends and
bonuses. However, recently the company has been showing signs of following
an exit strategy, wanting to pull out of some branch lines, all long
distance passenger services, and the commuter rail services in Auckland and
Wellington.

The Auckland Regional Council negotiated a deal with Tranz Rail to buy the
infrastructure in the Auckland area for $112M, with an ongoing rental of
$2.5M p.a. Trouble was, Auckland really wanted the government to pick up
part of the tab.

The government has finally recognised the risks of fragmenting the network,
and has said it will take over the  business of talking to Tranz Rail - but
has already announced that it will not pay "anything like $112M" (the Prime
Minister's words on TV).

Bill