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Corbella: Premier Kenney will certainly cancel oil-for-rail contracts

Train cars waiting for pickup in Winnipeg. In February, the government's government signed $ 3.7 billion contract with CN and Canadian Pacific Railway to lease up to 4,200 rail vehicles to retrieve crude oil.

The Canadian press / John Woods

Premier Jason Kenney's new government will cancel $ 3.7 billion for oil-to-rail contracts signed by former Prime Minister Rachel Notley's NDP government just weeks before the election with CN Rail, CP Rail and some other rail partners, a leading Premiership member staff confirmed Friday night.

The source says that the government has received legal opinions – from both governments and external lawyers – stating that Albert's government can break these new agreements through legislation, especially because Kenney warned the CEOs of Canada's two largest railways in writing and publicly that he would not consider his government to be bound by an agreement concluded by the NDP in an attempt to save its options.

Reached Friday night, Kenneys press secretary Christine Myatt, submitted a written e-mail statement confirming the news revealed by senior staff.

"We have been clear from the beginning: These agreements, which were rushed by a desperate government before a election, should never have been signed – by the government or the railways," said Myatt.

"There was no reason why private companies could not have stepped up to carry more oil by rail. It is still our position. If these agreements cannot be transferred to the private sector on acceptable terms, our government will do what it is. necessary to protect Albert's taxpayers. "

Kenney made it known on February 1, the first day Notley could have called the election, which ended on April 16, that if he was elected, he would examine all the agreements concluded by the province to ensure that they were the best province and its citizens interests, something he called "value for money".

On February 19, Notley announced she had signed contracts with the Canadian Pacific and Canadian National for renting 4,400 railway cars to move oils that are oily to North American markets. On the same day, Kenney reiterated his position that, if he was elected – and he was 20 points ahead of that time – he would examine the contracts to ensure they were a good deal for Albertans.

The next day, February 20, Kenney sent letters to the CEOs of both companies and warned them to terminate the deals if they were found to be of public interest.

"If elected, a United Conservative government will do everything within our power to suspend NDP's ruthless spending on US $ 4 billion borrowed tax money to disrupt the market," Kenney says.

He said oil companies would send more oil by rail if it was profitable and rightly pointed out that Alberta could not afford the deal since the NDP ran huge multibillion dollar annual deficits leading to a debt expected to hit $ 96 billion in 2024.

The senior official said he could not reveal details of the contract, he could say what was not there. In Notley's rush "to try to have a Hail Mary pass to buy a victory," her now defeated government "went into very poorly negotiated contracts." The contract says senior manager, does not seem to contain "kind of guarantees" and exit clauses that someone enters into a multibillion-dollar deal would have provided graceful outcomes from the contract. This deal really locks the government in without any alternative but the nuclear option if they want to come out.

"Thorough analysis shows that the government significantly overpaid the services, but the conditions are confidential," the source says. Yet, it was revealed that CN and CP went into $ 2.2 billion of the $ 3.7 billion plan.

"The parties – especially the CP and CN, signed cynical and exploitative terms – exploited an outgoing government willing to do business for political reasons and on all conditions," the staff said. "If (railway companies) were cautious they would have kept going because Jason Kenney made it clear what his intention was. He made no secret of it, they were noted the day the contract was signed and before they started taking action to fulfill the contract."

It is never good for investor confidence when a government kills agreements made by previous governments. Tim McMillan, President and CEO of Canada's Oil Producers Association, has often said earlier that the suspension of the Northern Gateway pipeline by Prime Minister Justin Trudeau "was the most detrimental thing to have done for our economy."

Trudeau, who unilaterally killed Enbridge's Northern Gateway pipeline in July 2017, after having been facing years of rigorous and costly regulatory procedures and being handed over to the House of Commons, shook confidence in investors who have never recovered and are warier than ever with the fed Billing C-69, the Impact Assessment Act, which critics say unamended, will make large energy projects and pipeline construction impossible.

But this cancellation differs markedly. The contract holders cautioned and some time had passed.

Judging from a statement by CN spokesman Jonathan Abecassis, the iron giant does not seem to be planning to counter Keny's new government.

"CN strongly supports the premiere's desire to get Alberta oil on the market and we want to be part of that solution ahead." It is a vague statement but magnificent.

CP did not send any messages or calls from Postmedia.

The hope of the Kenney government – which will keep its speech from the throne on Wednesday – is that if rail oil is meaningful, the private industry will rise and make it happen.

Licia Corbella is a post media columnist.

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