THE NZ GOVERNMENT made a NZ$300 million provision for settlement of claims arising from finance minister Nicola Willis’s December 2023 decision to cancel the iReX Cook Strait ferry replacement project.

NZ media is reporting a bizarre situation where Ms Willis this morning repeatedly refused to confirm the figure, which was to cover the costs of broken infrastructure contracts for port/terminal works, and the break fee – which still hasn’t been agreed – with the shipbuilder Hyundai Mipo Dockyard.

Half an hour later Treasury released the Cabinet papers that detailed the size of the provision.

Meanwhile, NZ deputy prime minister and rail minister Winston Peters last week visited HMD during an Asian tour and declared the shipyard to be in the running to build the two smaller iReX replacement vessels.

He said HMD was open to a bid to build the new smaller ferries and had indicated it could meet the size specifications involved in that.

“I’ve got a serious contender back in the ring of potential contenders for the tender for two replacement ferries for the Cook Strait,” he told Radio New Zealand in Seoul on Friday.

Treasury advice to Cabinet in December 2023 was that the break fee would have to be paid out to HMD regardless of whether it is chosen for the replacements. KiwiRail had a NZ$551 million fixed-price contract with HMD for the rail/ro-paxes, regarded worldwide as a bargain.

Delivery of those vessels would have begun next year, whereas the arrival of the replacement replacements – when a builder is finally chosen – will not be until 2029, by which time the existing ferries will be well past their theoretical use-by dates.

Ms Willis cancelled iRex after projected costs blew out by some NZ$3 billion, entirely attributed to landside (port/terminal) costs associated with the larger ships.

The Cabinet Papers release today detail the expectation that the ports – Wellington and Picton – fund “as much of the landside development as possible” for any new ferries.

“The ports will, where possible, pass these costs on to operators in user charges, which in turn will likely be passed on to ferry customers,” the paper noted.

There has still been no confirmation if the latest ships will be rail-enabled.