The railway union is accusing the government of breaking a pre-election promise to stop the removal of electric trains from the North Island's main trunk line.
KiwiRail freight trains use diesel locomotives in Wellington, switch to electric units at Palmerston North, then back to diesel in Hamilton.
That's because 1980s electrification of the main trunk line was never finished.
KiwiRail decided two years ago to replace its electric engines with diesel.
The Labour Party told the rail operator in August it would stop that plan, so the rest of the line could still be electrified.
It said removing the engines would make it virtually impossible to electrify the rest of the network.
KiwiRail said it has received no directive and is pushing ahead to get rid of the locomotives by April next year.
Transport Minister Phil Twyford said he was still talking with the company, but it was clear it could not afford to buy new electric engines.
"KiwiRail makes the case that they are dealing with the legacy of decades of under investment and that it's very hard for them to justify on cost grounds, replacing the electric locos that are at the end of their life, with new electric locos," he said.
Rail and Maritime Transport Union general secretary Wayne Butson said the electric engines were not at the end of their lives.
He said KiwiRail has not maintained them and all they needed was new wiring and electronics.
"At 30 years old they are some of the youngest locomotives in the KiwiRail fleet," he said.
KiwiRail said it would take four years to get new electric engines into service, because they have to be made for New Zealand conditions, including its narrow track and tunnels.
But Mr Butson said the operator could buy a refurbished model of the same train for sale in Queensland.
"A group of engineers went from KiwiRail to Queensland, our understanding is that they said that these locomotives were immediately acceptable for our fleet," he said.
Mr Butson said it was not clear why KiwiRail turned down the Queensland locomotives and the company had refused to give them a copy of the engineers report.
KiwiRail said while electric engines were cheaper to maintain, they were more expensive to buy and it estimated diesel engines were between 30 and 40 percent cheaper over the course of their lives.
It said having a more efficient service encouraged companies to use rail, rather than road, which reduced greenhouse gas emissions.
Minister for Workplace Relations Iain Lees-Galloway is to meet with staff from the electric depot in Palmerston North next week to talk about their futures.