CN seeks $50M to maintain freight rail in N.B.

CN Railway is looking for $50 million from the New Brunswick government and other partners to maintain freight rail service in the northern part of the province.

Otherwise, the company will be forced to discontinue part of the Newcastle Subdivision service by March 2014, officials announced at a news conference in Fredericton Thursday.

The company says it's incurring annual losses, due to declining traffic volumes and infrastructure costs and needs assistance to keep the 224-kilometre stretch between Catamount, just west of Moncton and Irvco, about 32 kilometres west of Bathurst, operating.

"The line in its current state, both from business volumes and its capital requirements is not sustainable in the long-term, unless we see a major change in how the line is being used by our customers," said Sean Finn, executive vice-president of corporate services.

About 12 to 15 customers currently use the line, he said.

The line has been losing money since CN re-acquired it in 2008 from what was then the New Brunswick East Coast Railway.

Critical factors in keeping it running will include shippers' willingness to put more traffic on the line, and the willingness of governments to partner in funding major capital upgrades needed to retain the line's ability to efficiently handle freight traffic, the company said in a statement.

CN has been working with customers and the provincial government for "many months," trying to find solutions, Finn said.

But to date, they have been unsuccessful.

As a result, the company has started the discontinuance process for that stretch of line under the Canada Transport Act, said Finn.

Still, the company will continue to work in good faith to find ways to preserve the service, he said.

The provincial government has identified potential growth opportunities on the northern and southern segments and plans to work with CN to put together a detailed funding proposal for consideration by partners.

"Ensuring the appropriate infrastructure is in place for current and future industries in Northern New Brunswick is an important part our government's commitment to strengthening our regions, and building a strong and prosperous province," Transportation Minister Claude Williams said in a statement.

However, "I want to be very clear. The province of New Brunswick will not be the sole stakeholder dealing with the Newcastle line," Williams said Thursday.

CN will "ensure" that passenger rail service between Montreal and Moncton and beyond will be maintained, officials said.