NEW Zealand’s KiwiRail has started discussions with South Korea’s Hyundai Mipo Dockyard over a termination agreement for the contract for the build of two new Interislander ferries for Cook Strait service.

This follows the National Party government of prime minister Christopher Luxon’s decision last year not refuse further funding for the Inter-Island Resilient Connection (iReX) project, which included two pax/rail/ro-ro ferries and new terminals in Picton and Wellington.

KiwiRail chief executive Peter Reidy noted the government has announced that it will appoint a Ministerial Advisory Group to provide independent advice and assurance to ministers on the future options for a Cook Strait connection. The Ministry of Transport will also lead an assessment of long-term inter-island service requirements.

Replacement options for the Interislander ferries are expected to be part of these broader reviews and KiwiRail will be working with our customers and the international shipbrokers on options to source suitable replacement ferries, Mr Reidy said.

“KiwiRail will be working closely with the Government, MAG and all stakeholders on options for a safe, reliable and resilient Cook Strait connection to transport freight and passengers.

“KiwiRail would like to thank our people, contractors, our port, Mana Whenua and union partners, and all those who have worked tirelessly on this project up to this date, but, unfortunately, we cannot proceed without further Government funding. We respect the Government’s role as shareholder and funder to make this decision.

“KiwiRail would also like to thank HMD. HMD has continually shown its value and professionalism as one of the world’s leading ship builders, with work delivered to the highest quality. KiwiRail thanks HMD for its partnership through the design phase of the contracted ferries.”

The NZ$551 million contract for the ferries was signed with HMD on 1 July 2021, for delivery in 2025 and 2026. It is understood construction has not yet started.

Mr Reidy said KiwiRail’s focus remained on “providing the safe, reliable and enjoyable Interislander service our customers expect. The Interislander moves on average $14 billion of freight and over 800,000 passengers between the islands each year and is an essential part of the New Zealand supply chain.

“Our high-quality maintenance regime is consistent with the world’s best practice standards. Over the recent busy summer period of December and January, we delivered 100% reliability and 93% on-time performance.”

At the time of the government’s 13 December 2023 decision not to provide an additional $1.47 billion to cover cost blowouts in shoreside infrastructure, KiwiRail board chairman David McLean acknowledged the disappointment of its team and stakeholders involved in the project.

“We sought a strong outcome for New Zealand through this project for a more resilient State Highway 1 across Cook Strait for exporters, domestic freight forwarders, tourism and domestic commuters.

“We will work with the Government, our customers, ports and other stakeholders on the way forward. An alternative suitable long-term solution could take years to develop,” Mr McLean said.