Province Extends Rail Agreement, Creates Working Group
The province is taking steps to ensure rail service continues in Cape Breton by extending its funding agreement with RailAmerica and creating a working group to look at its long-term future.
The Cape Breton and Central Nova Scotia Railway will continue to operate until at least Sept. 30, 2011, under the agreement.
"This investment supports the businesses and jobs that count on the railway to receive materials and deliver products," said Percy Paris, Minister of Economic and Rural Development.
"However, we must live within our means, and this support cannot continue indefinitely. That's why we will work together to find a sustainable long-term solution."
The working group, under Economic and Rural Development, includes representatives from Transportation and Infrastructure Renewal, Service Nova Scotia and Municipal Relations and the Cape Breton and Central Nova Scotia Railway.
The $3.5-million extension is retroactive to March 31. The agreement includes up to $3 million for the 18-month extension. An additional $500,000 is also available to continue service if a transition period or further examination is needed. The working group has been successful finding ways to address issues including crossing fees, property leases and development on, or near, railway lands.
Crossing fees are now set at $300 per year, with future increases subject to approval by Utility and Review Board. Lessees will have the option to buy their land at fair market value or continue to rent, and matters related to property development will remain between the railway and the developer.
"As members of the business community, both RailAmerica and Cape Breton and Central Nova Scotia Railway look forward to actively participating in the working group established by the province to find a permanent solution that will benefit the people and industries of Nova Scotia," said John Giles, RailAmerica president and CEO.
The working group will continue its work, focusing on long-term profitability. It is estimated that roughly 10,000 railcar transports are needed every year for the company to break even. There were about 1,500 railcars transported in 2009. The working group is tasked with finding solutions to bridge that gap.
"We are pleased to continue operations and serve customers across our rail line, including from Port Hawkesbury to Sydney, in partnership with the province," said Shannon Toner, general manager of Cape Breton and Central Nova Scotia Railway.
Under the previous agreement that expired in March, the railway could access up to $10 million over five years, or $2 million annually, for working capital and maintenance costs. The rail line used $9.5 million over that time.
"The rail line is an essential part of keeping costs manageable for our business. The loss of the line would have an immediate negative financial impact of $250,000 per year," said Sean Burke, vice-president and general manager of Polysteel Atlantic.
"Without this service, it would be difficult for our business to remain at our current location and continue to offer our customers a high quality, competitively priced product."