Public transport operators and infrastructure contractors will be given more flexibility to manage rising fuel costs, with NZ Transport Agency moving to monthly fuel price adjustments across contracts.
Transport Minister Chris Bishop says the change is aimed at easing pressure on operators and contractors as fuel prices increase.
“Rising fuel prices are putting pressure on Kiwi businesses, including the public transport operators keeping our buses and ferries running, and the contractors building and maintaining our roads and infrastructure,” Bishop says.
Most NZTA contracts already include fuel price adjustment mechanisms, but these have typically been applied quarterly. Bishop says that has created cashflow challenges when prices move quickly.
“We’re fixing that. NZTA is moving to monthly interim fuel price adjustments across its public transport, construction and maintenance contracts so operators and contractors are not left waiting months to recover rising costs,” he says.
Bishop says the change will not increase overall contract costs but will help smooth cashflow and reduce risk, particularly for smaller operators.
“This is a practical, common-sense change. It doesn’t increase the overall cost of contracts, but it does smooth cashflow and reduce risk, particularly for smaller operators who don’t have the balance sheets to absorb rapid cost increases,” he says.
He says the move is expected to help maintain reliable public transport services and ensure infrastructure projects continue without disruption.
“Public transport operators play a vital role in keeping our cities moving every day. This change gives them greater certainty and helps ensure services remain reliable for passengers,” Bishop says.
The Government says the approach is designed to be temporary, targeted and responsive to fuel price volatility linked to global factors.
“This change meets that test. It uses existing contract settings, applies for as long as volatility persists, and can be scaled back when conditions stabilise,” Bishop says.
NZTA has advised the updated approach applies to all relevant public transport, construction and maintenance contracts, and will publish updated index values monthly based on Statistics New Zealand data.
Once fuel prices stabilise, NZTA is expected to return to quarterly adjustments.
