A report that rail operator Toll is planning to switch its freight business to road has been rejected.
Toll spokesperson Sue Foley said rail was still its preferred option but it was waiting to hear if it would have to pay extra fees to Ontrack to use the rail network, which included the Napier to Gisborne service.
For the past two years the Government had contributed $7 million as a top-up figure to help Toll pay the network fees to Ontrack.
The Government had decided this year, however, to withdraw its contribution so a fee could be arranged directly between Toll and Ontrack.
Mrs Foley would not say how much it had cost Toll to lease the Napier to Gisborne line but disputed media reports the company was thinking of moving to a road transport system.
Customers of Toll were alarmed by a claim it may axe main-trunk freight trains unless the Government and Ontrack softened an increase in track fees.
"There were stories in the Independent (Financial Review) yesterday that we're not even going to comment on ... sure road is an option but we are moving by rail now and it's business as usual," she said.
Hawke's Bay regional transport committee chairman Rex McIntyre said he would not be surprised if Toll decided to move to a road system.
"The Napier to Gisborne line is uneconomical but I think what Toll is doing is playing a political game with the Government to get out of paying the extra costs of maintaining the line," Mr McIntyre said.
State Highway 2 could handle the extra pressure from trucks if Toll moved to road, he said.
"But we would need to have it substantially upgraded. What we've got now is a broken-down rail line and a broken-down road," Mr McIntyre said.
The Road Transport Forum urged the Government to "call Toll's bluff" as it did over the Australian-owned company's threat to end the Overlander passenger service and said truck operators would be willing to step in and run their own rail freight service on the main trunk line.
"The Government must not give in to Toll's Australian standover tactics," forum chief executive Tony Friedlander said last night.
"Let it shut its main trunk freight service and allow other operators the opportunity to provide that service."
A consortium of truck firms had bid unsuccessfully in the past to buy into rail, he said.
Toll, which also runs a large fleet of trucks, was not commenting on a report in the Independent Financial Review that it was threatening to shut down large chunks of its North Island freight operations unless it gained a rapid resolution to an 18-month dispute over access fees.
An arbitrator, Bill Wilson QC, was expected to hold a closed hearing in about six weeks but there were fears the dispute would not be resolved without going to court.
Toll NZ bought rail operator Tranz Rail in 2003 and the following year sold most of the track network to the Government.