KiwiRail Settles with Hyundai Mipo Dockyard for $144 Million Over Cancelled Project iRex Ferries

Wellington, New Zealand — In a significant move, KiwiRail has reached a final settlement with Hyundai Mipo Dockyard, paying $144 million to conclude the cancelled Project iRex ferry contracts. The decision to cancel the contract was among the first major actions taken by the new government, formed in late 2023, highlighting its commitment to reevaluating costly infrastructure projects.

Rail Minister Winston Peters has been vocal in addressing the media's initial speculation regarding the settlement amount, which had suggested a much higher figure. Peters clarified that the $144 million payment was designed to cover the costs incurred by Hyundai Mipo Dockyard and its global suppliers, emphasizing that the cancellation was not a reflection on the Korean shipbuilder’s performance.

According to Peters, the government had initially set aside $300 million to cover potential costs related to exiting the iReX commitments. Now, with the settlement finalized, this funding is being redirected toward other government projects, a move that he described as a demonstration of fiscal discipline.

However, the settlement has not been without controversy. Labour's transport spokesperson, Tangi Utikere, criticized the payment as 'staggering,' noting that the total taxpayer cost has now exceeded $222 million. Utikere's comments underscore the ongoing debate over the financial implications of the project's cancellation and the broader management of public spending.

Meanwhile, Finance Minister Nicola Willis pointed to rising land-side infrastructure costs as a key factor in the project's escalating budget. She indicated that these increasing costs had significantly impacted the original forecasts, contributing to the decision to abandon the ferry contract.

Despite the controversy, Peters highlighted that agreements had been reached with key stakeholders, including CentrePort, Port Marlborough, and KiwiRail, on the scope of infrastructure improvements. These agreements are focused on enhancing marine infrastructure in Picton and Wellington, a move that Peters said would support long-term transportation needs.

The government has reiterated its commitment to ensuring that public funds are used efficiently, with Peters stating that the settlement represents a broader effort to save taxpayers billions of dollars through disciplined project management and cost control.