OTTAWA — The British Columbia government should keep Canadian National Railway Co.’s privatization in mind as it weighs the future of BC Rail, says Paul Tellier, president and chief executive of CN.
The National Post reports that in a Vancouver speech, Mr. Tellier suggested the privatization of the provincial railway would help create a sound business environment in the province.
“I do not want to prejudge what the Premier might want to do about BC Rail, but I can see where CN’s turnaround from Crown corporation to successful North American railroad has some relevance to the situation here,” he said.
CN was privatized by the federal government in 1995 and has gone on to become the most efficient North American railway.
In his speech, Mr. Tellier noted the extensive consolidation that has gone on in the rail industry but stopped short of saying CN would buy BC Rail if it is put up for sa le. A company spokesman said afterward CN would likely take a look if the government decides to privatize the operation.
Last month, Canadian Pacific Railway Co. said it would like to buy at least parts of BC Rail.
The provincial Crown corporation is the third-largest railway in Canada measured by revenue and has more than 3,000 kilometers of mainline track and sidings.
But it is a money loser, with $650-million in debt and an operating ratio, a key efficiency measure, near 90%. It has abandoned its intermodal business and has reportedly had talks with other operators about some of its passenger service.
One of its key problems is that as a Crown corporation it relies on government funding and cannot tap equity markets. At the same time, the B.C. government is tackling its own debt problems and is trying to cut costs.
But the B.C. government’s room for action is limited. During the last provincial election the Liberals promised not to privatize BC Rail.
In his speech, Mr. Tellier urged the government to be bold in creating a business-friendly environment in the province.
“It is clear to me that the tough choices are often the smart choices. The decisions are unpopular in the short term, but the people of British Columbia will reap the rewards,” Mr. Tellier said.