* Shippers, railways failed to agree on changes
* Railways wary of more regulation, shippers want reliable service
Dec 10 (Reuters) - The Canadian government will unveil long-awaited legislation on rail freight service on Tuesday in Winnipeg, Manitoba, the heart of the country's grain sector.
The legislation, as an amendment to Canada's Transportation Act, has pitted shippers like grain handlers, miners and movers of commercial goods, against railways Canadian National Railway Co and Canadian Pacific Railway Ltd.
The shippers want better service, and some say this should include penalties for poor service, while the railroads dislike the idea of additional regulation that they say could make the system less efficient.
Representatives of shippers and railroads spent four months in a government-sponsored committee this year trying, but ultimately failing, to develop both a template for service agreements and a dispute resolution process. Penalties are one contentious issue.
Last month, Chief Executive Claude Mongeau of CN said imposing service obligations on rail companies might help one shipper, but hurt others down the line as railroads are large, interconnected networks.
Shippers, including farmers, say they need protection from the market power of the two dominant Canadian railways. Unlike the United States, the Western Canada crop belt does not have a river system to move grain to port.
The legislation requires approval by Canada's House of Commons and Senate.
Transport Minister Denis Lebel and Agriculture Minister Gerry Ritz will hold a news conference in Winnipeg on Tuesday morning, the Conservative government said late on Monday.