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The Otago Daily Times has been told the Royal New Zealand Navy is eyeing the city as a possible regional base for new ice-strengthened vessels due in the next few years.
Dunedin was a contender because of its proximity to Southern Ocean operations, engineering cluster, harbour facilities and logistical support capabilities, the rumour suggested.
Dunedin Mayor Dave Cull and senior Dunedin City Council staff, Otago Regional Council chairman Stephen Woodhead, Port Otago chief executive Kevin Winders and Farra Engineering chief executive Gareth Evans were all aware of the rumour when contacted this week.
None had confirmed details, but Mr Winders hoped to raise the matter in a meeting with navy officials when he visited Auckland later this month.
Defence Minister Ron Mark said a ''routine feasibility study'' examining the future of Auckland's Devonport Navy Base was under way.
He was not aware of any plans for a Dunedin base, but referred ''operational'' questions to the NZDF.
An NZDF spokesman initially denied the rumour, saying there was ''no plan and no intention for the Royal New Zealand Navy to increase its current footprint in Dunedin''.
However, pressed on whether an unconfirmed plan was being considered, but not yet finalised, he would not comment further.
Instead, further questions were referred to the NZDF's ministerial services team, which could take up to 20 working days to respond, he said.
National Party defence spokesman Mark Mitchell - a former defence minister - said he was also not aware of any plans for a new regional base, but it was ''very possible'' something was being worked on.
''Short of confirmation from them, I would just be speculating,'' Mr Mitchell said.
Dunedin was already home to HMNZS Toroa, the city's naval reserve headquarters, and is the home port for patrol vessel HMNZS Otago.
A 2016 Defence White Paper outlined plans to spend nearly $20billion upgrading the nation's defence forces by 2030, including buying two new ''ice-strengthened'' and ''winterised'' vessels.
The move reflected New Zealand's increasing focus on Southern Ocean operations, it was said at the time.
Mr Evans, of Farra Engineering, said this week the latest ''somewhat credible'' rumours would be a boost for the city and make sense for the navy.
''With two icebreakers entering the fleet, it doesn't make sense to be doing the maintenance and support for those vessels out of Devonport. It's just extra kilometres for no good reason.
''The only question is where they would increase their South Island presence ... Otago's a sensible fit because Invercargill's a bit small and Lyttelton's a bit far away.''
His company already did ''quite a lot'' of marine maintenance work in Dunedin and Lyttelton, but a new base ''would be very attractive''.
''Anything where you bring something like that into the city, would bring a lot of engineering work.''