October 11, 2008

New Zealand buys back rail network from Toll

Reuters reported that New Zealand government is buying back the rail network from Australia's Toll Holdings Ltd. As per report New Zealand government would pay NZD 665 million (USD 520 million) for the operation, including inter island passenger and freight ferries and take control on June 30.

Mr Michael Cullen finance minister of New Zealand said that the privatization of the rail network in the early 1990s had been painful and seen the asset run down. He said that "During the negotiations with Toll it transpired that buying the rail operating business including the ferries was the best way to increase investment in the industry and enable it to be more responsive to the needs of New Zealand customers.”

Toll, Australia's biggest transport group acquired control of the rail operation after a protracted takeover bid for TranzRail Holdings Ltd in 2003. At that stage the New Zealand government bought the rail track network for NZD 200 million and gave Toll exclusive use for an annual fee based on performance along with promises to invest in new rolling stock.