Province of Nova Scotia extends subsidy to rail line
Written by jrood
The Dexter government of Nova Scotia will provide C$3.5 million to keep Cape Breton's railway running until at least next September, the Chronicle-Herald reports. The subsidy is an extension of a five-year, C$10-million deal the previous Tory government struck with RailAmerica, owner-operator of Cape Breton & Central Nova Scotia Railway. That deal expired March 31. The new deal is retroactive to that date and will keep the railroad operating until Sept. 30.
Economic and Rural
Development Minister Percy Paris said a fair assessment of the railway’s future
must be done, and a working group of government and company officials has been
struck to do that.
"It’s a matter of us
having the right data, the right information in front of us, so that we can
move forward with Cape Breton Rail," said Paris.
The amount of traffic on
the line is far below what is needed for the company to be profitable.
A provincial news release
said the estimate is the line needs 10,000 railcar transports every year for
the company to break even, but there were only about 1,500 in 2009.
One of its customers was
quoted in the release as saying that the rail line is essential in controlling
transportation costs.
"The loss of the
line would have an immediate negative financial impact of C$250,000 per
year," said Sean Burke, vice-president and general manager of Polysteel
Atlantic, just outside Sydney. "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."
The subsidy, for working
capital and maintenance costs on the Cape Breton section of the line, includes
up to C$3 million for the extension period. There is another C$500,000
available for a "transition period" or if more study is needed.
Paris said the subsidy
for an unprofitable rail line shouldn’t be compared to the government’s
decision late last year to pull a subsidy from the unprofitable Cat ferry
service in Yarmouth. "Replacing a ferry is certainly not the same as
replacing a railway spur. Once you pick up a (rail) spur, it’s gone. It’s gone
forever, the cost to re-lay a line is just so expensive, and when you’re
talking about a ferry service, I think it’s a whole different ball game."
The province also struck
a deal on crossing fees for people who need to cross the rail line to get to their
properties. The fee is set at C$300 annually, with increases to be determined
by the provincial Utility and Review Board. People who lease the land from the
rail company will have the option to buy their land at fair market value.
