Canada orders railways to repay excess grain revenue

Wed Dec 19, 2012 12:05pm EST
 
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* Ottawa caps railways' grain revenue

* More grain moved by rail in 2011/12

WINNIPEG, Manitoba Dec 19 (Reuters) - Canada ruled on Wednesday the country's two big railways, Canadian National Railway Co and Canadian Pacific Railway Ltd, earned too much money from hauling grain in the 2011/12 crop year, and ordered them to pay close to C$700,000.

The railways exceeded their government-mandated caps on revenue from moving western grain by less than 0.1 percent, the Canadian Transportation Agency said.

The Canadian government implemented the grain revenue cap in the 1990s after it eliminated a subsidy for grain movement by rail called the Crow Rate. The cap applies to revenue the railways earn by moving grain from the Western Canadian crop belt to ports.

CN's grain revenue was C$240,185 higher than its cap of nearly C$543 million, while CP's revenue came in $400,132 above its cap of about C$494 million.

The companies have 30 days to repay the excess, plus five percent penalties. The money goes to the Western Grains Research Foundation.

CN and CP spokesmen could not be immediately reached for comment.

The railways moved 33.1 million tonnes of grain from Western Canada in 2011/12, which was 6.2 percent higher than the previous year's volume.