23 August 2012

Wellington’s trains: replace or refurbish?

Greater Wellington Regional Council (GWRC) and the NZ Transport Agency announced today they intend to replace rather than refurbish the existing Ganz Mavag trains to complete the region’s peak train requirements.

“When all 48 2-car new Matangi trains (or 96 cars) are in service later this year, at least a further 26 trains will still be needed for peak hour services,” GWRC Chair, Fran Wilde, said today. “In the immediate future the older Ganz Mavag trains are being used, but the ageing and increasingly unreliable fleet needs to be refurbished or replaced to ensure reliable services are provided as demand continues to increase.”

Last year, based on a comprehensive cost/benefit analysis of refurbishment versus replacement, GWRC decided in principle to refurbish the Ganz fleet subject to funding and final comparison costs. The NZ Transport Agency agreed to fund at least 50% of this refurbishment project.

“However, we have recently received a competitive offer from Hyundai Rotem, supplier of the Matangi, for up to 35 additional new trains (or 70 cars). This offer is less than half the cost estimated in 2011 and with more robust information on the maintenance cost of the Matangi and Ganz fleets, buying more Matangi units looks considerably more favourable than it did last year.

“Importantly our reviews and independent analysis show that buying more Matangi trains would have about the same impact on regional fares and rates as refurbishing the Ganz Mavag fleet because debt repayment would be spread over a longer period.

“The key issue is that if we refurbish the Ganz trains we still would have to purchase replacements for them at the end of their life in fifteen years’ time at whatever the price is in 2027,” Fran Wilde said.

“Buying more Matangi trains offers a rare opportunity to completely renew an entire fleet in one extended procurement process.

“The Council will be considering this at its September meeting and if approved we would then begin negotiations. The financial evaluations and economic modelling we have done as part of our due diligence so far show that it is a ‘no-brainer’ to pursue this option.

“We expect that during the 35 year life of the new trains there would be a $228m saving over the cost of refurbishing the Ganz fleet and replacing them in 15 years.”

Jenny Chetwynd, NZ Transport Agency’s Regional Director says the NZTA's contribution of at least 50% of this investment in new trains reflects the strength of the proposal.

“These new trains will be a great investment that provides good long term value for money and will significantly improve state highway congestion issues as well as the reliability, capacity and quality of Wellington's public transport services. This should help to encourage future passenger growth and help economic productivity throughout the region. This is a significant and worthwhile financial commitment which delivers on the NZTA's investment priorities and the regional transport strategy.”

Cr Peter Glensor, Chair of the Regional Council’s Economic Wellbeing Committee, which oversees the council’s public transport activities, said that the replacement option offers two benefits: facilities on the trains and reliability.

“An all-Matangi fleet would mean that all of Wellington’s metropolitan trains would be modern, efficient, fully accessible, air-conditioned and reliable. We anticipate that more people would use the new trains which would help reduce peak congestion and transport-related pollution. Thus apart from the competitive price on the table – half of last year’s market estimate - an important issue is the performance and high quality passenger experience of the Matangi fleet, and the improving levels of punctuality,” Cr Glensor said.

“We are also pleased with the very positive feedback we are receiving from drivers and on-board crew as they become more familiar with the new Matangi trains.

“Having a single fleet also makes good economic sense: driver training would be simpler and more consistent; no heavy maintenance would be needed in the short term; warranties would be extended; spare parts and inventory holdings would be reduced; and we would not need to undertake further major rolling stock procurement for at least 30 years,” Cr Glensor said.

Crs Wilde and Glensor said that from the beginning they had explored the issue of the impact of this decision on Hutt Workshops.

“However, we have been informed by KiwiRail that the workshops have enough current and planned work for the existing workforce and are not reliant on the Ganz Mavag refurbishment work. All regular maintenance on the Matangi trains will also continue to be done locally.”

Ms Wilde says that if negotiations proceed, delivery of the first unit could be around the middle of 2014, with the entire fleet in service by mid 2016.

GWRC is seeking public comment on the proposal to replace the Ganz Mavag fleet. To tell the GWRC what you think go to: www.gw.govt.nz/metro-fleet-proposal You need to give your feedback by Friday 14 September 2012.

Metro Fleet Expansion proposal – Q & As

How will the two options, refurbishing or replacing, affect my rates?
Refurbishing or replacing the Ganz Mavag fleet would have a similar effect on your rates. The purchase of the new trains involves a bigger capital investment than refurbishment. This is balanced out by a longer period for repaying the debt.

Why are you consulting on this?
Greater Wellington is legally required to consult publicly on all significant ventures such as this. We would normally consult on major activities and expenditure through either the annual plan or the long term plan process. We consulted on both of these plans earlier this year. At that stage, the decision had been made in principle to refurbish the Ganz fleet. But circumstances have now changed considerably, so we need to carry out this special consultation process.

We’ve just got new trains, why do we need more?
The 48 new units are more than sufficient capacity for off peak services but about 22 more units are still required for peak hour services. The initial order for the new trains was made with the knowledge that we would need to refurbish or replace the Ganz Mavag fleet in the near future.

How much will they cost?
Negotiations on the specific cost would take place after the Council makes the decision at its meeting on 26 September 2012. Because of the commercial sensitivity of these negotiations we cannot release any details of the costs at this stage.

If you replace the Ganz Mavag fleet, what will happen to the refurbished prototype?
We’ll keep the prototype as part of a contingency fleet for the Wellington metro rail service.

How can I get more information?
More information is available at www.gw.govt.nz/metro-fleet-proposal.

If you have any questions, you can email info@gw.govt.nz

ENDS

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