New Zealand which privatised its railways in the same year as Britain has this month brought the railways back into public ownership.

KiwiRail was launched by Prime Minister Helen Clark after the assets were transferred to the government on 1 July 2008 from the private company which held the rights to the franchise until 2070. The government paid £250million to acquire assets which had a theoretical value of of £165million.

The move came three years after the Government bought back the 2,500 mile network for a nominal dollar. The network is now run by ONTRACK which sets access charges for trains which use the network.

KiwiRail's chairman is Jim Bolger who as prime minister sold off the railways to private enterprise 15 years ago.

Mr Bolger said the cost of fuel and environmental concerns had changed and Mrs Clark said the renationalisation was a major step in building a sustainable transport system for the 21st century.

She said: "With rising fuel prices and a sense of urgency in the fight against climate change, governments around the world are again looking to rail as a central party of 21st century economic infrastructure.

"With our rail system back in public ownership, we can make the strategic decisions and investments necessary for rail to play its full part in building a more sustainable New Zealand.

"Over time, we will be able to move more and more freight off our roads and on to rail. Rail will also play a bigger role in public transport in our major centres."

A rail development group will present the government with recommendations for the future structure of the rail businesses in early August.

Finance Minister Michael Cullen said the privatisation had clearly not worked.

He said: "From asset-stripping to trading scandals, New Zealand's experiment with rail privatisation failed to produce much-needed investments in this critical part of New Zealand's transport infrastructure.

"By bringing our rail system back into public ownership we will spare future generations from subsidising a private rail operator and we will be able to create an integrated, sustainable transport system."

Information from Railway Gazette International and railfuture at yahoogroups.com