Tuesday, October 17, 2017

Canada gives OmniTRAX 30 days to repair HBR

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Canada gives OmniTRAX 30 days to repair HBR OmniTRAX

The government of Canada is giving OmniTRAX 30 days to repair and restore service on the Hudson Bay Railway to Churchill, Manitoba, or risk a lawsuit for breach of contract.

Official statements from Canada Minister of Natural Resources Jim Carr and Merv Tweed, president of OminTRAX Canada, each blamed actions of the other for the delayed rail repairs.

The line between Amery and Churchill has been inoperable since May 23 due to a 200-year flood event that requires between CA$20 million (US$16.18 million) and CA$60 million (US$48.55 million) in repairs. In September, the government of Canada "formally demanded" that the Hudson Bay Railway Company, which is owned by OmniTRAX, honor a 2008 agreement and repair the tracks.

"Since the rail service disruption in late May 2017, the government of Canada has been working towards the restoration of the rail line. Despite these efforts, OmniTRAX Inc., the parent company of the owner and operator responsible for restoring service to the affected communities, has not met its obligations. As such, today, Transport Canada sent OmniTRAX Inc. a notice of default of its agreement, demanding that it complete all railway repairs and resume rail service within 30 days. Failing this, Transport Canada will instruct Justice Canada to file a lawsuit for breach of contract," said Minister Carr.

In response, OmniTRAX issued a statement saying the action is an indication that the government of Canada has no intention of solving the situation.

"Culminating in the threat of legal action from Transport Canada, it has become clear to us that the federal government has no intention of constructively solving this problem for Churchill. It appears from their collective indecisiveness, dysfunction and lack of leadership on this critical issue that both Canada and the province of Manitoba are content to leave Churchill as a remote, fly-in community for the first time in over 100 years," said Tweed.

Tweed cited a "neglectful approach to Churchill" and a continued reduction in federal financial support that has resulted in the "collapse of commercial activity along the line to the point of non-viability."
"It is our view that, as a result of the federal government's actions (or inactions) recently and over the past ten years, the HBR is not commercially viable and should be regarded as a public utility. We recognize this position has frustrated many, but it has become the inconvenient truth for Churchill," said Tweed.

He continued, "We do, however, believe a solution is achievable, as do many of the local stakeholders. In early August, we entered into an agreement with Grand Chief Dumas and a new coalition of First Nations buyers. This coalition has the capability to operate the line and ensure it can offer a sustainable link to Churchill and points north. This agreement now hinges on the federal government and its willingness to provide the requisite approvals and financial support."

Minister Carr also cited potential buyers of the line, saying, "I am encouraged by the significant breakthrough towards an agreement between Missinippi Rail and One North to create a unified group as a potential buyer. I am optimistic that the partnership can develop a viable, sustainable business plan towards owning and operating the line. Their collective interest in regional ownership and focus on long-term sustainable operations represents an important step towards ensuring viable transportation in the years to come."

Minister Carr said Canada's appointed Chief Negotiator Wayne Wouters would continue to facilitate discussions in the next few weeks between all parties, including with the Missinippi Rail and One North partnership.