Waitohi Ferry Project FAQs

The work being undertaken now is an extension of the enabling works programme and is necessary for the main works to occur if funding is approved. This work is being funded by Ferry Holdings and has no financial impact on Port Marlborough or ratepayers.

The ferries have been ordered and the first is due in early 2029, so the project is moving at speed to accommodate the new, larger ships on time.

Port Marlborough and Ferry Holdings expect the funds to be required from late 2027 after the lease and license agreement for the ferry operator is finalised.

Modelling shows that, under conservative assumptions, debt associated with the project can be fully repaid within 30 years. Repayments will be determined by the boards of Port Marlborough and MDC Holdings, taking into account financial performance, investment priorities and maintaining a resilient and financially sustainable port for the region.

The debt being raised and passed on to Port Marlborough does not affect Council’s debt covenant performance with the Local Government Funding Agency because subsidiary lending is excluded for these purposes.

The existing ferry infrastructure is nearing the end of its economic life and, without investment, will soon be unable to accommodate ferries or generate revenue. This would directly affect Port Marlborough’s ability to deliver an annual dividend to Council.

If the proposed loan through the Local Government Funding Agency (via Marlborough District Council) is not supported, Port Marlborough would likely need to raise debt through a separate process or renegotiate aspects of the ferry redevelopment with Ferry Holdings. Borrowing outside of the LGFA is expected to come at a higher cost. Current estimates indicate interest rates could be up to 1% higher on the $110 million required. This would increase Port Marlborough’s debt servicing costs and reduce the level of dividend returned to Council. The debt would also still sit within Council’s consolidated balance sheet. In addition, alternative funding arrangements would not provide the same level of certainty around financial guarantees or bond protections for Port Marlborough.

Regardless of the consultation outcome, investment in the ferry infrastructure will be required. The key difference is the cost of that investment and the impact it has on Port Marlborough’s financial performance and returns to the region.

The Long Term Plan (LTP) is a three-year cycle. In both the 2021-22 LTP consultation and this consultation, there was not enough known about the project’s scope, risk, or costs to be able to consult the public. As a result, the specific options in this document now under consideration could not reasonably have been consulted on through the LTP process. These options also cannot wait to be consulted on during the next LTP in 2027 because Port Marlborough requires Council’s decision before June 2026 to confirm the development agreement and the port company’s role in the project. Under the Local Government Act, Council may consult the public using a Special Consultative Procedure outside of the LTP cycle, in circumstances such as these.

The Dublin Street Overbridge in Picton will be completed as part of this project, but it is not part of this consultation. Council’s borrowing, should there be any, is not being used to fund this construction project. The Government is funding this roading infrastructure.

Port Marlborough and Ferry Holdings are jointly investing in this project to deliver new ferry infrastructure. The purpose of the SPV is to hold and manage the ferry assets that are jointly funded by Port Marlborough and the Crown (new wharf, seawall and adjacent civil works). By co-owning these assets through a single, separate entity, both parties have clear roles of ownership, with responsibilities and risks clearly defined. This co‑ownership approach provides certainty for long‑term investment and avoids ambiguity about who owns and maintains the assets.

This SPV would not be a council-controlled organisation. The proposed SPV is a different ownership model to the earlier ferry redevelopment proposal. Its final form will be known once the development agreement is finalised.

The SPV will own a new wharf, seawall and adjacent civil works. Specialised assets, such as the rail linkspan and rail infrastructure will be owned by Ferry Holdings directly. Transitional assets, such as the temporary berth, will be removed at the end of the project and will be funded by Ferry Holdings.

Port Marlborough has agreed to a security package with Ferry Holdings to support the ferry operator’s obligations under the proposed long-term lease, licence and operator fee arrangements. Non-payment of lease and licensing by the ferry operator is subject to a bond and a financial guarantee.

In addition, this agreement is also for 60 years (30 + 30 years), ensuring that Picton remains an important part of the Cook Strait crossing. If a second 30-year period is not renewed or the contract is terminated before 60 years, a ‘balloon payment’ would be made to the Port if another ferry operator could not be found within two years.

The Government has committed to delivering the new ferries in 2029. In the unlikely event that this ship contract is also cancelled, Ferry Holdings has agreed to remove all works at its cost. It has also agreed to make good the removal of these works or reimburse Port Marlborough for the cost of doing so.