Cook Strait ferry project $167m over budget — and key port deals still unsigned
Wednesday, 11 March 2026
The Media Council has upheld a complaint about this article, finding the headline and article were inaccurate and misleading.
The Cook Strait Ferry Replacement Programme is already $167 million over budget, newly released documents reveal.
The current cost estimate has hit $1.867 billion, already exceeding the $1.7b Crown-tagged contingency approved by Cabinet in March 2025.
The Government is relying on council-owned ports to plug the gap, but the amounts are unknown or not yet approved by ratepayers.
However, as The Post revealed last month binding commercial deals with the port companies are yet to be finalised.
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Port Marlborough is a subsidiary of the district council, which had agreed to on-lend the now-cancelled the iReX mega-project, $110 million. Any additional lending would require public consultation with ratepayers.
The expected contribution from CentrePort – owned by Greater Wellington Regional Council and Horizons Regional Council– has never been publicly revealed. The anticipated amount is redacted from the proactively released documents.
Picton requires a complete wharf replacement because existing assets are at the end of their life, while Wellington requires a new dual-level linkspan that was not in the original plan, the documents reveal.
Interim Development Agreements (IDAs) were struck with the port companies by the end of 2025. Those agreements have not been made public, despite a request from The Post.
The final deals - called Final Approval to Deliver (or Final ATD) which would confirm full scope, funding, won’t be inked until mid-2026.
The documents describe Picton as requiring more extensive work because existing assets have reached the “end of their serviceable lives”.
The project requires a new wharf, a new linkspan, a vehicle access bridge, and a passenger walkway.
The “minimum viable” approach in Picton also requires temporary infrastructure so ferry services can continue while the new wharf is built.
Ferry Holdings Ltd (FHL) said the transition facilities – including temporary berths – are needed to avoid service disruptions while the existing port infrastructure is replaced.
However, the agency confirmed the temporary infrastructure will later be demolished because it “does not currently have an enduring operational use”.
The documents also show the cost of Port Marlborough’s works increased largely because of the investment required to build these transition facilities. They do not say by how much.
In Wellington, the project relies more heavily on modifying existing infrastructure, although FHL warned this creates a “tight” construction environment.
Initial plans to reuse an existing linkspan were abandoned after technical assessments found that to be “technically infeasible.”
Instead, the project scope was expanded to include a new dual-level linkspan capable of handling the new 200m rail-enabled ferries.
Unlike Picton, Wellington will retain and upgrade several existing assets, including the terminal building, marshalling areas and berthing pocket.
FHL also warned ministers that the “interface” between the new ships and the port infrastructure remains a key programme risk while the commercial arrangements with the port companies are finalised.
‘Severe service disruption’
The urgency of the project is underscored by the deteriorating state of the current Interislander fleet, which is also “nearing the end of [the ferries’] serviceable lives”.
FHL warned the government that delaying ship contracts to wait for finalised port deals would result in losing shipbuilding slots, meaning new vessels would not be delivered in time for the current fleet's retirement.
A $596m fixed price contract with shipbuilder Guangzhou Shipyard International was signed last year and announced by Rail Minister Winston Peters in November.
FHL said the 2029 deadline is essential because “without timely replacement, New Zealand would face reduced capacity, and a loss of resilience”.
Despite the budget pressure and tight timeframes, FHL says “the programme remains on track to deliver its approved scope.”
The newly released papers also shed light on how the replacement ferries were procured.
FHL ran a six-month fast-tracked procurement process to select a shipbuilder, significantly shorter than the typical 18-month procurement used for large shipbuilding projects.
Officials initially assessed 15 global shipyards, before inviting six to submit proposals based on their experience and their ability to secure construction slots for vessels delivered within four years.
The competition was eventually narrowed to two finalists.
Guangzhou Shipyard International was selected as the preferred builder because its proposal offered a more comprehensive delivery approach, fixed pricing covering core elements such as interior design and galley fit-outs, and a 24-month warranty.
Due diligence carried out by legal, financial and technical advisers, including KPMG and maritime law firm HFW, found no “red flags”.
Reference checks with international ferry operators described the Chinese shipyard as having “exemplary capability” to deliver large vessels on time and at a fixed price.
The ships will be about 200 metres long and designed as rail-enabled RoPax [roll-on/roll-off passenger] vessels, allowing trains, vehicles and passengers to travel between the islands.
They will use a diesel-electric hybrid propulsion system with azimuth thrusters, designed to meet maritime safety standards and future carbon-emissions requirements.
The release of documents comes after FHL turned to one of the country’s most expensive commercial law firms to fend off an Official Information Act (OIA) request from The Post.
Documents released include the Interim Approval to Deliver (ATD) Business Case, dated November 6 2025; the Key Decisions Report,with the same date; and an Update to Ministers on the Procurement Process, dated August 25.