September 24, 2018

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Federal money for consortium takeover of Churchill port, rail waiting for Omnitrax to sign deal

John Woods / The Canadian Press</p><p>The Port of Churchill and the rail line to the community have sat idle since a flood in May 2017 damaged tracks. </p>

John Woods / The Canadian Press

The Port of Churchill and the rail line to the community have sat idle since a flood in May 2017 damaged tracks.

OTTAWA — The federal government has approved a financial package for the northern Manitoba consortium angling to take over Churchill’s railway and port, suggesting a deal could be imminent ahead of a planned visit to Winnipeg from Prime Minister Justin Trudeau next month.

The federal Treasury Board has approved funds for the consortium, sources tell the Free Press, making that money ready for Ottawa to transfer, once Denver-based Omnitrax signs a takeover deal.

Officials would not say how much money is involved, nor how long it’s intended to last. The cash would likely be related to repairs along the line and initial funding needed to start soliciting business.

Any longer-term funding arrangement would likely need parliamentary approval, such as in next spring’s budget.

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OTTAWA — The federal government has approved a financial package for the northern Manitoba consortium angling to take over Churchill’s railway and port, suggesting a deal could be imminent ahead of a planned visit to Winnipeg from Prime Minister Justin Trudeau next month.

The federal Treasury Board has approved funds for the consortium, sources tell the Free Press, making that money ready for Ottawa to transfer, once Denver-based Omnitrax signs a takeover deal.

Officials would not say how much money is involved, nor how long it’s intended to last. The cash would likely be related to repairs along the line and initial funding needed to start soliciting business.

Any longer-term funding arrangement would likely need parliamentary approval, such as in next spring’s budget.

A May 2017 flood washed out sections of the track between Gillam and Churchill, severing the lone year-round land link to the town on Hudson Bay.

Since last September, Ottawa has been brokering talks between Omnitrax and a consortium of northern Manitoba groups, to have the port and railway transferred with the help of Toronto financier Fairfax Financial.

Those talks have been in a holding pattern for weeks, with most issues ironed out. Previously, sources claimed negotiations had hinged on Omnitrax’s reluctance to guarantee any unforeseen liabilities — if mould was found at the port after its sale, for example.

Officials familiar with the talks claimed that Omnitrax has been more helpful in recent weeks, from facilitating site visits to pushing interim deals forward, though some suggested it's the result of the company securing financial concessions from Ottawa.

Omnitrax declined to comment Wednesday.

The federal government is hoping to have a final deal announced before the end of the month, and have repairs underway by early September — narrowly allowing for the 60 days required to do repairs on the line that would enable light passenger-train travel before the winter freeze.

Trudeau is set to visit Winnipeg next month, sources say, with a tentative date set for Sept. 11. High-ranking officials are under pressure to get repairs visibly underway before that date.

Ottawa plans to have Fairfax’s grain associate, AGT Foods, use some of the equipment from its railways in Saskatchewan to repair the line.

In any case, a federal tribunal is homing in on its demand that Omnitrax repair its railway, issuing a Tuesday order to prove that work is underway.

The Canadian Transportation Agency sent Omnitrax’s Hudson Bay Railway subsidiary a "show-cause direction," following up on its June order to start repairs along the line by July 3 or formally abandon the railway, noting the "limited construction season" before this winter.

Omnitrax had instead put forward a tendering process to solicit bids to fix the railway, which it claimed meets the regulator’s demands, though it said the repairs would only proceed "assuming funding is available" from government or investors.

The CTA wrote Tuesday that "HBR’s contention that a tendering process constitutes compliance… is questionable, particularly in the absence of a concrete plan" to repair the railway. It doubled down on its finding that Omnitrax ought to formally walk away from the railway if it can’t afford to fix it, and can’t hold it without doing so.

The order gives Omnitrax until next Monday to demonstrate why the CTA shouldn’t rule it's in violation, putting the onus on the company to prove why the tribunal shouldn’t set specific deadlines for parts of the repair.

dylan.robertson@freepress.mb.ca

 

 

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