NZ Rail Investment: Long term Investment Key To KiwiRail’s Success
March 17th, 2010
Sustained investment in KiwiRail’s infrastructure and rolling stock will be essential to the state owned railway company achieving long term financial viability. KiwiRail’s Chief Financial Officer David Walsh says over recent months the SOE has been reviewing the business to assess the long term investment required if the Govts annual $90m operating subsidy is to be eliminated and to lead rail to commercial success.
Walsh says KiwiRail needs to improve its competitiveness especially in the time sensitive freight market, where he says rail has been losing market share to road for several decades due to a lack of investment in the rail network. He notes rail’s share of the road/rail interisland freight market has slipped to about 30% largely on the back of the cuts in the road transit time between Auckland and Wellington. These have not been matched by similar cuts in the rail transit time which has largely stayed static.
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Walsh says there is no quick fix to KiwiRail’s financial problems. He believes to turn around the gap between revenue and expenses which totalled $136.8m in the six months to Dec 31 will take at least 10 years. Despite there being no immediate light at the end of the tunnel, Walsh says KiwiRail sees plenty of long term opportunities for growth in volumes and revenue. “There are a lot of upside opportunities. We are already seeing more interest in people wanting to use rail.The key is to get people to view investment in the rail network as improving the country’s overall national infrastructure base.”
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