Otago Harbour Ferry Inc chairman Shem Sutherland was delighted when the 75-horsepower new John Deere engine was lowered into the hull.
"This is a big step forward for the project," he said.
"It was important to get an engine that fits the boat, rather than a boat that fits the engine."
The $20,000 engine was bought with funds from the Dunedin City Council.
Boat-builders would now be able to start work on the internal structure, deck and wheelhouse.
Another $70,000 was required to complete the project, hopefully by January.
Then when the Portobello jetty was upgraded, people could be ferried from Portobello to Port Chalmers.
Elsie Evans was built in Auckland, of kauri, and was the first pilot boat for Timaru in 1902.
In 1927, it was brought to Dunedin.
From 1928, it was a launch; then a passenger ferry between Portobello and Port Chalmers from 1943-54, licensed to carry 37 people.
It was later given to the Otago Harbour Ferry Inc on permanent loan, from the South Canterbury Historical Society.
