CN is hoping to sell the rail line between Lyalta and Delia to a group of counties and municipalities. The group, which contains Starland and Wheatland counties and the Town of Drumheller, will be meeting with CN this week to discuss the deal.
The price was set at $12 million for the railway and includes the rails, ties, ballast, bridges, crossing protection systems, and other track materials.
The offer expires on July 15, 2012, with a closing date of the transfer of October 15.
“From Lyalta to Delia, they’re asking $12 million, but they need a lot of repairs. To put new rails down it’s about $1 million per kilometre,” said Starland Reeve, Barrie Hoover.
The railways in the area have been a contentious issue. Hoover estimated it was 2008 when the railways were last used, and even then, not that much. The municipal group has hoped to cut a deal with CN to use the rail line. The end goal would be to repurpose the railway, not get rid of it.
“We formed a group to continue shipment by having a short line here to load producer cars, ship grains, and use for tourism. We looked at additional businesses that could be on the line and there were a few possibilities,” said Hoover.
The counties and municipalities will be meeting with CN this week to discuss the offer, but there are some hurdles to work through,
“The letter we received was heavily weighted their way. We’ll find out if they really want to sell,” said Hoover. “We’re hoping they’d considered tax concessions for the rail, but now it looks like they want to keep the right away under their own name."
By retaining control of the right away, CN would still own the land underneath the railway and would effectively still be in control of the land. In Hoover’s eyes the transfer would be so the counties and municipalities would clear away the old rails for resale.
“Right now, I can’t see us coming up with $12 million to buy assets for resale,” said Hoover. “We were trying to buy the rail and the land as well. One of our goals was to clean it up. If things don’t go throught they probably will remove the rail."
One of the factors which may drive the discussions is potash near Oyen. Rail lines could be used to move the potash. CN may put heavier rail lines in response to the potash mines, explained Hoover.
For now, Hoover hopes discussions can steer towards other possibilities.
“We want to know if there is a possibility to lease the line,” said Hoover.
Representatives from the counties and municipalities and CN meet this week to discuss the offer.
