Govt Launches New Company to Procure Modern Ferries for Inter-Island Service

“The funding envelope established ensures value for money, even when factoring in break fees from the previous project,” Willis said.

The New Zealand Government has announced the establishment of a new company to oversee the procurement of two state-of-the-art ferries, ensuring a dependable and resilient ferry service for passengers and freight between the North and South Islands.

“This decision underscores our commitment to a safe, reliable, and commercially viable transport solution that supports New Zealand’s connectivity,” said Finance Minister Nicola Willis.

New Ferries Expected by 2029

The modern ferries are scheduled to begin operations in 2029, replacing the aging fleet nearing the end of their operational lifespan. While the project cost remains commercially confidential pending procurement and associated infrastructure negotiations, the Government has emphasized that costs will be substantially lower than the original Project iRex estimates.

“The funding envelope established ensures value for money, even when factoring in break fees from the previous project,” Willis said.

Private Sector Invited to Submit Proposals

Minister for Rail Winston Peters highlighted an innovative step in the procurement process: inviting private-sector proposals during the first stage.

“This approach ensures no potential solutions are overlooked, fostering innovation and avoiding the pitfalls of past mismanagement. The quadrupling of Project iRex costs—from $775 million to over $3 billion—illustrates the importance of getting this right,” Peters stated.

Submissions will be assessed alongside other procurement evaluations in March 2024, after which the Government will finalize the project direction.

Dual Mandate for the New Company

The newly formed limited liability company will have a dual role:

Ferry Procurement: Conducting the procurement process and presenting recommendations to Cabinet.

Infrastructure Coordination: Collaborating with ports, KiwiRail, and other stakeholders to advance landside development planning.

“Our goal is to maximize the use of existing infrastructure while ensuring the final solution accommodates rail freight transport across the Cook Strait,” Willis said.

Improved Cost Management and Oversight

The Government is implementing stricter oversight and accountability measures to prevent cost overruns, a lesson learned from the mismanagement of Project iRex. The company will operate under the Public Finance Act 1989, with the Ministers of Rail, Finance, and Transport serving as shareholders.

Economic and Environmental Benefits

The new ferries will incorporate modern technology, providing improved fuel efficiency and reduced emissions compared to the current fleet. This aligns with the Government’s broader sustainability goals while enhancing the reliability of New Zealand’s critical transport link.

Next Steps

The procurement process is underway, with initial evaluations and public-private collaboration slated for early 2024. The Government remains committed to delivering a robust solution that ensures long-term inter-island connectivity, bolsters economic resilience, and supports sustainable growth.

Stakeholders are encouraged to participate in the process, as the Government aims to finalize a comprehensive plan that meets the nation's transport needs.