The money will be used to purchase additional new freight locomotives and wagons from China and will also fund further infrastructure upgrading. Transport minister Mr Gerry Brownlee says the extra funding will help make KiwiRail's railfreight business financially self-sustaining and also increase the resilience of the national transport system.

However, Brownlee also indicated that the struggling state-owned railway is still some way from achieving financial viability. "KiwiRail will need to achieve challenging volume and revenue targets in the future, but the company has put the foundations in place to achieve these targets," he says.