The rail continuance recovery plan has taken a big step forward with the recent completion of a feasibility study that depicts potential to develop a short line railway for grain hauling and industry.
Palliser Regional Municipal Services, on behalf of its shareholders, has undertaken to study the feasibility of purchasing the rail line from Lyalta to Oyen which was placed on the CN Rail discontinuance list.
“Based on what these consultants have worked on in the past, it is definitely feasible,” said Brad Wiebe, interim CEO of Palliser Regional Municipal Services.
Wiebe said the feasibility study focuses on grain handling as the primary use for a short line rail.
“Additional things such as tourism or industry are great to have, but are not to be gambled on to be a consistent revenue generator,” said Wiebe.
The primary rationale for acquiring the line and operating a short line railway is to enable producers of agricultural commodities, particularly those which would otherwise be subject to long - term storage and elevation, to avoid those charges by loading railcars directly, which the short line has received from the Canadian Grain Commission.
Such producer loading operations result in significant savings for producers in their farming operations, savings which are directly attributable to the ability of producers to load their own railcars and avoid the storage and elevation charges.
Accordingly, for a standard loaded railcar of 94 tons, each producer car loaded can save each individual operator, an amount of up to $1,541.
The feasibility study has determined the following benefits of a short line operation:
• Continuation of the payment of property taxes to each town, village or RM through which the rail line operates;
• The attraction of new business and the rejuvenation of old business facilities to offset the negative effects of prairie grain elevator rationalization programs, in particular the development of producer car loading facilities, as fuel prices and costs related to provincial and municipal infrastructure maintenance and construction continue to rise;
• Assurance that economic development opportunities for communities located on the line will continue to exist, which opportunities would disappear if the railway were to be abandoned;
• Avoidance of increasing maintenance and upgrade costs of the grid road system caused by the incidence of increased truck traffic, if the line were to be abandoned;
• Purchases of fuel, hardware, and other goods and services which engenders the creation and continued operation of local businesses along the line (grain handling, Co-ops, banks, restaurants, insurance brokers, equipment and automobile dealerships as examples);
• Savings to grain producers of up to $1,350 in elevation charges and other grain company charges per producer car or $3.375 million at 2,500 cars;
• Avoidance of fuel surcharges passed on by commercial truckers or future highway / grid road user fees.
• Stabilization of the local economic units adjacent to the Line;
• Retention of current revenues and increased future revenues (from income tax, shared portion of GST, negative population fluctuations slowed).
In consideration of the overall positive results of the feasibility study, the steering committee moved to proceed with a business plan followed by further public meetings. The public meetings are to be facilitated by Rail West Management, the consultant that was contracted to provide the study.
The consultant will provide an explanation of the business case, financing options and potentials.
Public meetings are tentatively scheduled for late October and will include stops at multiple communities along the rail line.
At this stage Wiebe says it is especially important that local grain producers that would have an interest in utilizing a short line railway for grain hauling attend to gauge the level of support for the potential of a short line rail operation.
