The bill to repeal the Saskatchewan Grain Car Corporation Act and make way for the sale of the provincially owned cars has received third reading.
Offers on the 900 cars are due May 12, and during committee debate on the bill, Highways Minister David Marit wouldn’t say how many had been received.
However, he did say he and Agriculture Minister Lyle Stewart de-cided to sell the cars last summer. They are the only two board members for the corporation.
“It had gone to the transformational change committee in June, and in July the board at that time made the decision to wind down the corporation,” Marit said in response to a question from critic Cathy Sproule.
The short- line railways were consulted in November and cabinet addressed the issue in January.
Marit said the railways were interested in having first dibs on the cars, and that was the “number one priority” when the decision to sell was made.
However, the short lines have since said they are disappointed in the accompanying decision to end the $900,000 annual grant they received for maintenance. Marit said they were told everything was on the table because of budget concerns.
The cars purchased in 1979 now have a book value of $6.3 million and are depreciating at a rate of $1.2 million per year.
The eventual buyer, or buyers, can expect 14 years of use out of them. The Association of American Railroads regulations govern how long cars can be used, and this type of car has a 50-year lifespan.
However, there is a provision in the rules that allows an application to extend that by 15 years.
“You can’t make that application until two years preceding the 50-year birthday, I guess, of these cars,” said SGCC vice-president of operations Kelly Moskowy.
There is no guarantee, he said, and there is a process, including the inspection of 10 percent of the cars. He also said that changes to the rules and costs could hinder an application.
“As an example, our cars do not have automatic slack adjusters on them,” he said.
There has been talk within the industry about making automatic slack adjusters mandatory.
“That change alone would be about $5,000 per car.”
Changes to side frames, trucks and wheels would be about $20,000 per car.
“It gets to a point where you’re only getting 15 years, and if you’re having to invest $20,000 or $25,000 additional into it, it may get to a point where you … price them out of the market when it comes to competitive lease rates,” Moskowy said.
Meanwhile, the purchaser will also have to honour a clause in the lease that applies to 415 of the cars being used by Last Mountain Railway. That short line has a lease until March 2021.