KiwiRail begins talks to can new mega ferries

KiwiRail is moving to cancel a contract to build the two new mega ferries. Image / KiwiRail
KiwiRail is moving to cancel a contract to build the two new mega ferries. Image / KiwiRail
KiwiRail has officially started discussions to terminate a contract with a South Korean shipyard to build two new mega ferries for Cook Strait.

At the end of last year, the Government declined KiwiRail’s request for an extra $1.47 billion for the Inter-island Resilience Connection (iReX) after the project’s total cost escalated to almost $3b.

A $551 million fixed-price contract to build the new ferries was signed with Hyundai Mipo Dockyard (HMD) in 2021.

Before Christmas, KiwiRail chief executive Peter Reidy suggested the deal could be rescued and the ships could still be built and then sold instead.

But in a statement today, KiwiRail confirmed it has now started discussions with HMD to enter a termination agreement.

The state-owned enterprise thanked HMD for their partnership through the design phase of the ferries.

"HMD has continually shown its value and professionalism as one of the world’s leading shipbuilders, with work delivered to the highest quality."

The Government has announced it will appoint a ministerial advisory group to provide independent advice and assurance to ministers on future options for a Cook Strait connection.

The Ministry of Transport will also lead an assessment of long-term inter-island service requirements.

KiwiRail expects replacement options for the Interislander ferries will be part of these broader reviews.

The state-owned enterprise will be working with its customers and international shipbrokers on options to source suitable replacement ferries.

"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 said.

"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."