Govt didn't know price of KiwiRail's new diesel locomotives

kiwirail diesel trains locomotives simon bridges transport new zealand
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Ministers approved KiwiRail's move to ditch its electric locomotive fleet in favour of diesel units without even knowing the cost.

Treasury documents show three ministers were warned by officials that KiwiRail's business case didn't contain the actual costs of the decision.

"The actual cost of (and therefore level of Crown funding required) this decision is not clear in the material provided to shareholding ministers," a Treasury report reads.

The state-owned rail company announced on December 21 last year that its 16 EF locomotives would be decommissioned and replaced with eight brand new diesel engines.

Ministers and Treasury were only told of the decision two days beforehand.

"The Treasury has had a matter of hours to read the business case. In light of this, the Treasury has not provided an opinion to shareholding ministers on the KiwiRail board's decision," the report says.

The report was sent to Finance Minister Steven Joyce, Transport Minister Simon Bridges, and State-Owned Enterprises Minister Todd McClay.

Mr Bridges supports the move by KiwiRail, despite the costs not being laid out.

"The cost of ownership of purchasing new diesel locomotives was not included in the Better Business Case," Mr Bridges confirmed.

"It was a painstaking decision they made. It wasn't an easy one. On balance, it was the right decision. They made the right call," he told a select committee.

"I haven't done a refined analysis of it. In my view, knowing what they went through wasn't a lack of analysis," says Mr Bridges.

Green Party transport spokesperson Julie Anne Genter grilled Mr Bridges about the ordeal during a select committee, especially over the long-term environmental impact of choosing diesel over electric engines.

"It's extraordinary that KiwiRail's Board would scrap our entire fleet of electric locomotives and switch to diesel without even knowing if that was the best value for money," she says.

"The more information we get about this decision the more it looks like these diesel trains will be less reliable, more costly, and more polluting," said Ms Genter.

The cost of each new diesel locomotive isn't being released.