NZ's central distribution hub gets $22m loan from govt

A $22.4 million dollar government loan is vital to realising the country's central distribution hub, according to the agency driving the project.

The government has announced that money from the Regional Infrastructure Fund is to be invested in the next stage of developing Manawatū's Te Utanganui precinct.

The $2.6 billion dollar project aims to connect freight across the lower North Island by air, road, rail, and sea and is expected to be completed by 2050.

Central Economic Development Agency [CEDA] chief executive Jerry Sherman said the funding would go towards a business case and, once signed off, construction to connect Palmerston North Airport to Bunnythorpe by rail.

He said the loan was crucial for the next phase of work.

"This is pretty vital. For an economic development agency to drive this work ahead would require us to invest money that we'd have to go back to our shareholders to request or to the stakeholders in this project.

"That wouldn't be palatable so this investment from central government, even as a loan, is quite critical."

Shearman said many businesses were already connected in the hub, including supermarket giants Woolworths and Foodstuffs, as well as primary sector industry.

He expected the business case and detailed design for the rail link to be done in the next 18 months to two years.

He said the agency was "pretty bullish" about moving the project ahead and all going well spades could be in the ground by 2030.

Sherman said there were nine key bits of work in the project including the ring road, rail hub, and the future land development - which had attracted some overseas interest.

"We're even in discussions with a group out of Australia around a data centre, so there's plenty of interest in the project, but it's a 25-to-30-year project to full completion."

KiwiRail executive general manager property Anna Allen said the full Regional Freight Hub was a long-term project that should cater to the central and lower North Island's freight needs for decades.

Regional Development Minister Shane Jones said the $22.4m funding helped keep the project on track and would address an infrastructure gap that was "constraining economic growth" in the lower North Island.

He said early-stage infrastructure was expensive and the loan would give the private sector confidence to invest.

Jones said 100-300 jobs were expected to be created during the early works on the freight hub.