Canadian Railroads > Alberta threatens legislation to break crude-by-rail contracts

According to the Calgary Herald newspaper,
new Alberta premier Jason Kenney will cancel crude-by-rail contracts with CP & CN.
Contracts with the two railways are worth $2.2 billion 
and were just signed earlier this year by the previous Alberta premier Rachel Notley.

A senior government source is quoted,
“The parties — particularly CP and CN, signed cynical and exploitative terms —
taking advantage of an outgoing government
that was willing to do a deal for political reasons and on any terms.”

The source was quoted saying that the railway contracts did not have,
"exit clauses that somebody entering into a multibillion-dollar deal
would have that would provide graceful exits from the contract.
This deal really locks the government in with no option but the nuclear option if they want to get out."

The newspaper reports,
"The source says the government received legal opinions —
from both government and external lawyers —
stating that the Alberta government can break these recent contracts through legislation."

The Calgary Herald newspaper article,
https://calgaryherald.com/news/local-news/corbella-premier-kenney-will-indeed-cancel-oil-by-rail-contracts



 



Edited 3 time(s). Last edit at 05/18/19 14:28 by Marcus.

If "cynical and exploitative" are reasons to criticize government actions, nothing would ever get done.

Posted from Android

Just another newly-elected government discovering that pre-election talk is easy, but post-election action requires hard work.

Ray

Knowing CP and CN, I suspect there are penalty clauses for the Alberta Government backing out of the deal. Both corporations are political players.



Edited 1 time(s). Last edit at 05/18/19 11:04 by eminence_grise.

What is the reason to cancel the contracts?

Mike Root
Madras, OR

shortlineboss Wrote:
-------------------------------------------------------
> What is the reason to cancel the contracts?


Jason Kenney explained his position at a press conference in Febuary,
when the crude-by-rail plan was announced by then-Premier Rachel Notley.

“The private sector was already investing in building more rail cars,
and government intervention would only interfere in the market,
making those rail cars more expensive for everyone.”

 “Effectively, all it does, the Premier’s announcement today does, is move risks and costs
from the private sector onto the backs of taxpayers when we can least afford it.”

 “By 2022, Alberta is projected to be producing about five million barrels per day of oil,
so spending $4 billion borrowed tax dollars to move
an additional 120,000 barrels will not make a signficant difference.  What we need is pipelines…” 

“The NDP has created a “fiscal train wreck”…. We can’t afford to add another $4 billion in debt
to do something the private sector was already doing. 
This announcement may also have the unintended consequence
of displacing shipment of grain and other commodities that are critical to the Alberta economy.” 

The former premier also cited a "lack of capacity" when she announced her plan. Government locomotives, oil tank cars, etc.

Posted from Android

ETA: The article notes that the contesting candidate notified CN and CP that if his Party came to power, he would seek to void the contracts. That's a very specific shot across the bow, but it seems the nature of the contracts (no exit clauses, very one sided, etc) was a last minute effort to hold onto power.



Edited 1 time(s). Last edit at 05/18/19 19:55 by Lackawanna484.