Churchill railway, port sale negotiations resume

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This article was published 11/7/2018 (227 days ago), so information in it may no longer be current.

OTTAWA — The Manitoba government is planning a third shipment of propane to Churchill this fall, the Free Press has learned, as talks aimed at transferring Omnitrax’s washed-out railway and mothballed port into local hands resume.

On July 3, federal officials gathered on a coastuard icebreaker docked at the northern Manitoba town, for a summit exploring Canada’s nascent Arctic strategy and Churchill’s role in the region. During a lunch break, Omnitrax’s subsidiary, the Hudson Bay Railway Co., issued a release, claiming the negotiations "have broken down."

That sudden news had Natural Resources Minister Jim Carr and town officials leave the icebreaker, to get briefed by officials, and craft media responses.

On Tuesday morning, HBRC issued a news release saying "active discussions to finalize the sale" had resumed the day before.

The company would not elaborate on what happened, but those close to the talks say the about-face has stalled negotiations that need to end soon in order to ensure the community’s lone land link is repaired before winter.

Sources who were not authorized to speak with media say there has been substantial disagreement about the value of Churchill’s railway and port. Ottawa believes Denver-based Omnitrax has to pay back $18.8 million in subsidies given under a 2008 contract (and likely $20 million of provincial funds contributed through a similar agreement). The company valued its assets at $20 million in a January 2017 deal that had fallen through, while sources say it has valued its assets as high as $35 million in closed-door talks.

Meanwhile, the engineering firm AECOM estimated the cost of repairing the line last summer at $43.5 million and said repairs would have to start by early September in order to finish before the November freeze-up.

AECOM has since reassessed the line and started a confidential tendering process for repairs. It would not say Tuesday whether the timeline and cost of repairs had changed.

Omnitrax chief operating officer Sergio Sabatini wrote Tuesday the company will start repairs along the line "so that we are in the best position to complete a transaction." Last Friday, the Canadian Transportation Agency asked the Federal Court to enforce a regulatory order to start repairs on July 3.

HBRC added Tuesday AECOM "will be co-ordinating site visits with six interested contractors later this week, each of whom will have the opportunity to conduct an inspection of the line via helicopter before finalizing their bids."

With no clear repair date in site, the province says its second shipment of propane heating fuel to Churchill, which arrived last week, will not be its last.

"The shipment received on Friday will carry the community through to the fall, at which time another shipment will arrive for winter," a Manitoba government spokesman wrote Tuesday.

The province would not say how much either shipment will cost nor how many litres it involved, citing the media blackout for the St. Boniface byelection. It cited the same reason to not explain how its 2.2-million-litre sealift of propane that arrived last October almost ran out last week — prompting the town of 900 to order emergency rationing before the second shipment arrived a week earlier than expected.

Instead, the province said it’s "in constant contact" with its supplier, Superior Propane, "to ensure that the community has the resources it requires in a timely manner."

Propane shipments take months to arrange, between locating and leasing climate-resilient propane containers, seeking dangerous-goods transportation permits and getting the propane on the month-long journey from Montreal.

The province earmarked $6 million for last fall’s propane shipment, most of which covers the cost of renting Eurotainer units.

dylan.robertson@freepress.mb.ca