Nova Scotia

N.S. government continues subsidy for idled Cape Breton rail line

The Nova Scotia government is continuing to subsidize a rail line in Cape Breton, even though no trains have run across the island since 2015. Business Minister Geoff MacLellan says the line will be needed if a proposed container terminal is secured in Sydney.

Business minister says rail line will be needed if developers successfully attract container terminal project

The Nova Scotia government has renewed an agreement to pay Genesee and Wyoming to keep the rail line across Cape Breton open, but the monthly amount will be lower. (Tom Ayers/CBC)

The Nova Scotia government is saving a few dollars while continuing to subsidize the vacated rail line that runs across Cape Breton Island.

The rail line owner, Genesee and Wyoming, discontinued running trains from Port Hawkesbury to Sydney in 2015 after diminished railcar traffic made the line uneconomical.

The province has been spending up to $60,000 a month to keep the line open while developers have been trying to secure a container terminal project for Sydney harbour. Proponents say a working rail line is critical for that kind of port development.

Earlier this year, Nova Scotia Business Minister Geoff MacLellan said he would need to see strong evidence of a port project before continuing the subsidy, which expires annually on March 31.

On Thursday, MacLellan said he has worked out a new deal with the rail line, fixing the subsidy at $30,000 a month for one year.

"For us, part of it was just the stability, the certainty in knowing what the financial outlay looked like on a month-over-month basis, and of course on the annual basis, as well," MacLellan said.

Business Minister Geoff MacLellan says the new subsidy agreement will cost the province less and there will be less administrative burden because receipts are no longer required. (Tom Ayers/CBC)

The former subsidy required the company to submit invoices for the actual costs incurred to keep the line in place in case sufficient rail traffic ever returned.

Under the new deal, the maintenance requirements are the same, but there is less administrative burden because receipts are not required, MacLellan said.

Sydney Harbour Investment Partners — known as SHIP — has an exclusive deal with Cape Breton Regional Municipality to develop a container terminal in Sydney harbour.

MacLellan said SHIP has lined up a significant amount of funding and that indicates a business plan that international financiers are willing to invest in.

"I believe there's life in this project," MacLellan said.

"It's not going to be government that pays the bills, but I just think we've got to give it every effort to make sure that all considerations are given. All opportunities to develop are still on the table and if the rail line's gone, they will disappear."  

MacLellan said the new subsidy agreement was worked out before the COVID-19 pandemic, but he would not have struck a different deal if he was negotiating now.

"What the long-term impact is going to be from COVID with respect to something like the global shipping sector ... there's really no way to determine that," he said.

Some people think the world is headed for a long-term economic freeze, while others suggest there will be a pent-up demand for goods because people have been stuck inside their homes, MacLellan said.

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