KiwiRail, HD Hyundai Mipo reach final settlement on cancelled ferries
New Zealand transport company KiwiRail and South Korean shipbuilder HD Hyundai Mipo have reached a full and final settlement on the cancelled ferries under the inter-island resilient connection (IREX) project, KiwiRail confirmed on Friday, August 15.
"The net NZ$144 million (US$85.5 million) final settlement payment is to cover the costs incurred by Hyundai and its global suppliers, and that is only fair as the decision to cancel Project IREX was never a reflection on Hyundai," said Winston Peters, NZ Minister of Foreign Affairs.
“As NZ$300 million (US$180 million) was originally provisioned to cover the potential cost of exiting IREX commitments, including settling the contract with Hyundai, more funding is now available for other government projects."
Mr Peters said that critics had pointed out that cancelling the contract would cost NZ taxpayers the full NZ$551 million (US$327 million) contract value, "but these are some of the same people who accepted Project IREX ballooning from NZ$1.45 billion (US$860 million) when approved in 2021 to [New Zealand] Treasury warning it was on course to NZ$4 billion (US$2.37 billion) in 2023."
"The settlement with Hyundai ends yet another sorry chapter in the story of the previous government’s mismanagement of the Crown’s books," added Nicola Willis, NZ Minister of Finance. "It signed up to purchase two big new ferries without giving sufficient consideration to the port infrastructure needed to support ships of a much bigger size."
Ms Willis said that, as a result, the cost of the project had almost quadrupled by the time the NZ Cabinet cancelled it in December 2023.
The NZ Government had earlier announced that it will appoint a ministerial advisory group (MAG) to provide independent advice and assurance to ministers on the future options for a Cook Strait connection.
KiwiRail said it will be working closely with the government, the MAG, and all stakeholders on options for a safe and reliable Cook Strait connection to transport freight and passengers.
The HD Hyundai Mipo-built ferries were originally slated to replace three of KiwiRail's ageing Cook Strait ferries, which are nearing the end of their respective operational lives.
The replacement vessels were to be designed with battery hybrid propulsion systems and facilities for handling both rail and Ro-Ro cargo.
