EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
Going back to 6-12, Public works and services, information item.
Petroleum products revolving fund.
Mr. Arvaluk: On the 6-12, petroleum products revolving fund, last year, let me make this clear for the minister. In the 2000-2001 main estimates, we budgeted for 60 million, we have sales of 77 million, we end up losing 7 hundred and 74 thousand.
Was this foreseen before 5 cents and 13.9 cents was introduced or was it in, does this include smaller 7 hundred and 74 thousand include 5 cents and 13.9 cents.
I would like to thank Mr. Galbraith for being able to be at the witness table, I'm sorry I wasn't able to say anything before he left.
Hon. Manitok Thompson (interpretation): I'm sorry Mr. Chairman, I just couldn't get your attention and I have to get my other officials to come here to the witness table, Mr. Roy Green who is, who deals with Petroleum Products Division.
I would like to welcome him at this time.
The question from Mr. Arvaluk if he heard the question of Mr. Arvaluk, he can answer the question.
Mr. Green: Thank you, Mr. Chairman.
The actual loss for, I don't have the actual sales numbers because both numbers for 77 and the loss of 774 thousand it's not the actual loss for the fiscal year March 31, 2000.
The actual loss that the petroleum products incurred last year was 342 thousand but if you look to the right here the 1.7 million loss was forecasted based on the prior without the 5-cent increase.
So with the 5-cent increase it actually reduced the loss to the 342 thousand for March 31, 2000.
Mr. Arvaluk: What about after at 13.9.
I'm sorry, Madame Minister.
Mr. Green is very excited today.
So I hope to, he can't wait for this little light to turn on.
So I'll just give the chair to Mr. Green.
This fiscal year without the 13.9 percent increase we would have probably incurred a loss.
I think we discussed that in the session in the fall that we would have reported a loss of approximately 13 or 14 million dollars.
What the actual, with the revised 13.9 increase, forecast of loss for this fiscal year would have been 774 thousand with the 13.9 increase.
If your estimates are accurate to have a small surplus of 3.5 million for next year then if the oil prices don't sky rocket like it did last time, what are your plans to do something for the consumers.
Hon. Manitok Thompson: We are thinking of possibly decreasing the price of fuel this summer after we buy the fuel.
We will be looking at if we can do something for decreasing the price.
Mr. Arvaluk: Last one Mr. Chairman, I welcome that comment and even if it doesn’t come true, I think the minister has a good intention of being fair to the consumers of Nunavut.
Given these thoughts with consideration and compassion.
Mr. Chairman, for the other operations you have 11 million 761 thousand.
This represents the bulging of the tanks, I mean the increased capacity and everything else that you have in the capital.
The 11.7 million that doesn’t include any expansion or upgrades to the tank farms.
Basically, what the 11.6 million is, it includes the ongoing repairs and maintenance to the tank farms.
It covers travel, it covers the purchase of services and supplies and various other expenses that are categorized into this one category.
To answer the member’s question, it has nothing to do with the expansion of the tank farms, but generally operating expenses.
I was going to make that my last question but what this is related to is that all your tank upgrades and expansions that are built in the communities are done by northern contractors, 100%.
I will pass this on to Mr. Mrazek, and I would hope that NNI is being followed in this policy.
I have the members shaking their heads, maybe they can concentrate on Mr. Mrazek’s answer first before they start shaking their heads.
We have a number of smaller value contracts in place for upgrades and expansion of the fuel tank facilities.
I don’t have the details with me, but the department is following the NNI policy as much as possible.
But in some cases, this work is highly specialized because they require pressure testing and pressure welding.
The last contract if I recall, which was more than a year ago, was from the qualified contractor who was from Yellowknife.
I don’t think we have anybody at this time fully qualified for this type of work in Nunavut.
Usually the general contractor could be arranging for the specialized services, but again, I don’t have the detail with me and I cannot provide that information right away.
Mr. Arvaluk: I am very disappointed that we have no professional tradesmen in that field yet.
Because as I understand it the Arctic College has been in existence for quite some time now and we have qualified mechanics from Fort Smith and elsewhere and etc. etc.
I hope that the Public Works will be working with the Department of Education to get that specialized training done like they did with the nursing, teaching and now the law school.
This is a very lucrative business because Nunavut is having an increase in size and population and will require, probably on an annual basis expansion of those tank farms in various communities.
Is there a plan to have a training program to have those specialized training programs so that Nunavummiut can qualify and take advantage of this work that is made available by this government.
We can certainly look into this and see how we can help in that regard with Arctic College.
I will make a commitment to ask the Minister of Education about it.
Mr. McLean: Qujannamiik, Mr. Chairman.
Mr. Green, since you have been with the Petroleum Products Division, it has been a great education for me.
I think I know most of this but I am going to ask a few more question so that I am fully versed in it.
Under salaries, 2.2 million.
What salaries are those, are those your complete head office salaries or is that just another branch.
My information says that salaries are forecasted to increase by 250 thousand.
These increases are based on the following filling of vacant positions; Finance Manager, Contracts Manager, Director, Secretary, annual incremental increases.
Mr. McLean: Okay. The 2.2 million, how many PYs is that and where are they.
Petroleum Products have 26 positions right now, we have 21 filled and I can’t tell you where they are specifically.
Mr. Green should have that detail about where those positions are located.
It is fourteen positions at PPD for us in Rankin.
There are three positions at the PPD regional office in Rankin.
There are four positions in the PPD regional office in Pond Inlet and there are three positions in the PPD regional office in Cambridge Bay and those are what make up basically the total staffing levels for PPD.
Mr. McLean: I don’t want to nitpick here today, Minister, but under other operations and maintenance, can you give me a bit of detail, I don’t want the detail right down to the penny, but can you give me some detail what that 11 million is billed to, the bulk of it.
I believe that Mr. Green has more detail so I'll pass that to Mr. Green.
I think you're well versed in those, go ahead.
Out of the 11.2 million dollars, 7.3 million dollars is paid to fuel delivery contractors in 24 communities to dispense the fuel throughout the communities.
There's roughly 4.5 million dollars, is that for travel and repairs and minor repairs.
Chairperson: Thank you, Mr. McLean.
The remaining approximate 4.5 million dollars, 2 million dollars of that is for repair and maintenance of tank farms and the remainder is used for office supplies, travel and purchase of services.
On the costs of goods, so 53 million 570 thousand dollars, could you give me a detail on what that is.
I know it's the price of the fuel, is there any other costs in there.
The costs of goods are comprised of exactly what the member said.
It's comprised of the cost to purchase the fuel and the transportation costs.
Mr. McLean: On the 7.3 million dollars that the contractors receive for pumping the fuel, is there a uniform commission rate or do they vary from community to community.
Thank you, Mr. Chairman.  Chairperson (interpretation): Thank you, Mr. McLean.
The commission rates vary from community to community. One of the factors that the cost varies from community to community is the number of assets that's required to provide a service like garaging, the number of vehicles and also the other fact that we try to take into consideration is the amount of fuel volumes that are sold in each community.
I read newspapers a lot probably, they only come one once a week but in the last newspaper I picked up there were tenders or RFPs, I think they're RFPs, for fuel contracts in the Kitikmeot region.
They close I think in April or May.
If the POL contracts, you add them all up when they're closed and you add them all up, if there's an increase in the costs of these contracts, is that going to be passed onto the consumers this year.
If the commission would increase, under the new RFPs, then obviously it would have to passed onto the consumer.
At this point in time, our objective is to re-write some of those contracts so that they're written in favour of the government. We're confident that the competition that you see in some of the communities now that indeed we may indeed see reduction in commission rates and if we can get our commission rates then that as well will be passed along to the consumer.
At this point in time, you know, we're just in the evaluation stages.
We're confident that if we can do some homework before we issue those contracts, in some cases we may get the commission rates down because that's one of our biggest costs that we've incurred now.
Mr. McLean: So you are anticipating that the costs, the commission rates on the current contracts are going to go down Nunavut wide so that will result in a fuel price decrease before we even purchase this next year’s fuel.
Unfortunately by the time that we, all the RFP’s are issued and the new contracts are not scheduled to come into effect until November 1.
So basically, it is about the same time that we would be doing our evaluation for the annual adjustment for fuel prices.
So that would be factored in what to do.
We would look at the evaluation of the fuel prices in the fall, the change to the commission rates would be a component that would be factored into the overall costs.
I think this will be my final question today on PPD.
These existing contracts were tendered out in 1991, for 10-year periods with an option for five.
If I remember correctly, there was a lot of controversy over these contracts when they came out.
Ten years ago I don’t know what the numbers were I never even saw it I didn’t even really inquire about it, but I know there was quite a bit of controversy on a few of them.
So what you are saying is that the commission rates that were charged ten years ago, and the commission rates that we may get this time may be lower.
When I evaluate some of the contracts that were signed in 1991, some of those contracts were issued where the commission rate was 5 cents.
But because of some of the clauses and the acquisition of assets during that ten-year period, most of those commission rates have doubled and tripled over the past ten years.
So we are basically not looking at a commission rate that was set ten years ago.
Mr. McLean: Mr. Chairman.
Minister, there has been a lot of talk about Article 24, NNI and things like that.
These contracts are to provide a service and they are mostly labour only.
To start with I know that you went to RFP or tender in the Kitikmeot.
There are a lot of businesses in these communities that are starting up and are trying to get their foot in the door to do things.
Like I say I don’t want to see the old GNWT policy come over to Nunavut, erase GNWT and put Nunavut on it because that’s what we have been doing for the past two years on a lot of stuff.
The thing is when you are doing these RFPs, and I haven’t seen one yet, I will probably table it in Cambridge Bay once I get hold of one, I will be chasing one down.
I will table it in Cambridge Bay, so you are forewarned.
But is it going to be possible for the little guy, the little guy on the street, that wants to start a business or is already in a small business, is it going to be possible for them to bid on these contracts and be successful or are we going to throw enough hoops and the bureaucratic bunk at them, that they are only going to be eligible for a certain group or one or two people in the community to receive.
Or is it going to be wide open for everybody to have a good hard look at it and be able to tender and then if somebody else is given a chance to bid on these contracts, is it going to be possible.
I think the intent on tendering is to get the best possible price for our government, is that going to be a case where everybody is going to be given a chance on an equal footing.
We will have it wide open for anybody to compete with it so anybody can try for these fuel contracts in the community.
Mr. McLean: So, my fear here and I'm going to be very candid is that if some big development corporation in Nunavut comes along and bids out every one of them and because of their economic clout, the little guys aren't going to be eliminated.
So, if a small guy comes along and has the best price possible and shows that he can, they've got the proper accounting procedure and can run a business that they will be successful over the big conglomerate.
Even the Finance Minister is saying of course, of course, everybody is frequently saying of course, so, of course, yes.
So, I take that everybody is getting an equal chance and NNI will play a factor in the contracting and awarding procedure.
That's a policy we have right now and that's a policy we will be using.
I would like to go back to an item that was being discussed earlier regarding RFPs and tenders and so on that is put out by your division and of course we were told that there's nobody who can do the job up here because they are so technical.
The jobs require that they are very specialized services that have to be provided and we have to get personnel from the south to do the job.
Some of these contracts are for five years.
In my community we have contractors from the south who are working on the pipes of these tanks.
How, do they have a five year contract or, well it's for both Sanikiluaq and Hall Beach and Arctic Bay and there's a large chunk of money that is going to be used in these communities.
How long are these contracts for, is it renewable on an annual basis or is it five years, or how many years are these contracts good for.
We didn't know which item you were talking about.
Is it something that was approved by the committee earlier.
That was a very good question.
But, we do not have the information as I don't have the information in front of me that says how many years those contracts are good for.
But we will look into it.
Mr. Arvaluk was requesting some information on the construction planning for tank farms.
I'm just following through with this questioning.
How is the arrangement for contracting for five years or maybe renewed annually, is that renewed annually.
It is for two years, I’m told.
Which of the communities were you referring to, I can give you the information on either of the communities but in most of them they are arranged for two years.
Our contract services are handled by the Co-op and now would be open to any person following through with McLean's questioning.
If it is going to be open to the general public and the ones who are experienced in handling those contracts and the people who are have quite a bit of money and clout and this for people who have no experience are you expecting to get contracts from those, get those contracts awarded.
I think he might have missed some of the translation here on that question.
I know that it is very good question.
His concern was that whether the people who are rich will be able to get the contracts or just anyone can apply for this contract.
The local business people will be the ones that will be considered not just necessarily the ones who have a lot of money or people who are just starting up their business.
For anyone who is private, has a private business license they will be eligible under the contract arrangements.
What she is talking about is that they will be taking training for some of the contractors or whoever applies for this contract for private sector contractors for fuel price delivery.
For people who want to take more courses in handling these contracts, would that be too late to apply for the contract in general.
Hon. Manitok Thompson (interpretation): I did not say that we would be training the private sector.
When people acquire the contract then we try and train them on handling their finances.
It is only after they have a been eligible to get the contracts not just people who are rich but we will be awarding this contract using the NNI procedures.
Under the 1.173 million under page 6-12, debts forgiven, can you give me some details on that.
Mr. Green can answer this question.
He has the figures in front of him.
Mr. Green: The 1.173 million dollars that the member is referring to are the subsidies that we pay to the revolving fund. The subsidies for Resolute Bay and for Cambridge Bay in the situation where the private contractor's operating expenses exceed the retail price so when that situation occurs PPD has to reimburse the contractor for those additional costs.
Mr. Arvaluk: But the operator still gets the percentage, under the contract to collect the full amount that he would get even when the government ends up paying for subsidising that particular community whereas other communities don't get that kind of subsidy when they balance their books out.
Can you look in my direction please, Mr. Chairman.
I was signalling that Mr. Green would answer this question.
You are the minister and you have to answer, not just your workers.
Mr. Green: Unfortunately the contracts for Cambridge Bay and Resolute Bay and Iqaluit, are a little bit different than the way that the remaining communities are administered.
What happens in Resolute Bay and Cambridge Bay and Iqaluit is that PPD buys the fuel and they sell the fuel to those communities at the cost that we buy it for.
Then what those operators do is that they have their own operating costs such as the inventory carrying costs, your own costs to administer and deliver the fuel and the repair and maintenance.
What happens is that the way the contract is structured is that when all their operating costs, if their operating component exceeds the retail price that is approved by the Financial Management Board, then they have to be reimbursed by the government.
So it's just the way, they're kind of privatized and it's just the way that those agreements are structured.
Whereas in the other communities, some communities they're making money, in some other communities we may be losing money.
The ones that are controlled through the revolving fund, PPD, they balance each other out.
But when it comes to the private operators, they have to go outside the petroleum revolving fund and the government has to reimburse them when their costs exceed the retail price.
I apologize for my previous remarks that I shouldn’t have uttered.
Mr. Arvaluk (interpretation): Let me try to get this, under the accounting term or accounting system that you have with the private contractor services.
This is not really a debt payment as I was complaining about earlier you know about your explanation system on this budget, whatever.
Could it be written down differently so that I can understand what the accounting terminology is used or how the system is used to come up with 1.173 million.
Okay, so in this case, in my plain language, is that purely a payment to the contractor after the service is done and this is what you know that in the beginning of the year that you know that you will pay him approximately at the end of the year.
Mr. Green: Unfortunately, it's not as simple as that process because what happens with those private contractors, when we buy the fuel and we turn it over to and sell it back to the private contractor.
If their operating costs exceed it, continue to increase, but at the same time we don't increase the retail price to offset those additional costs in a sense we have to reimburse the contractors.
Those are the additional, these are the additional monies that we had to pay for those private contractors where their operating costs exceed the retail price and we don't know that.
We really don't know that until each year when we take all, we get the financial reports in from those private contractors and we know what the price of fuel is on the world market.
Mr. Chairman operating costs could be anything.
Anything at all.
Let's look it up in the accounting book or bookkeeping or dictionary.
In other words, if you sell the fuel to this contractor and if you tell the contractor here's how much you are going to sell it for in Resolute Bay for example, if we decide, his operating costs include a brand new truck and one building and other things that requires him to operate that contract, then you give him 1.173 million dollars.
Unless if you could explain to me what the operating costs entail that requires you to pay more that was not planned by the government rather it was planned or incurred by the contractor.
I guess what I'm trying to explain to the member is the fact that those three communities operate outside, there's a contract between the Government of Nunavut and private contractors for them to operate the facilities without intervention from the government with the conditions.
The conditions of those contracts are that they are not allowed to set the retail prices after the Financial Management Board approves them.
Also in the contract it states that they can recover their inventory carrying costs, they can recover their financing costs, they can recover the costs for them to store the vehicle, the cost for them to hire personnel to live.
But those are the costs that are written in the contract and so each year when their cost if their costs component exceeds, exceeds the retail price then they, we have to subsidize them.
On the other hand if the retail price is higher than their operating costs which includes their commissions, whatever, then they would reimburse the Government of Nunavut.
Do you want to continue Mr. Arvaluk.
So, if a person a contractor decides to set up a small store selling oil products and windshield wipers and starter fluids and what have you, these are his operating costs in selling gasoline to the customers on this contract.
These should be considered as an operating cost or are you saying, are you telling me if you set a price for 50 cents and if he has been selling it for 50 cents then their furnace broke down it cost him more now to recover his operating costs because the furnace broke down.
Which one is it.
What he plans to do something while they have contracts or something that happened that will not make him meet or honour the contract.
Basically the way the contracts are structured is that when they were originally signed, the contractor, there was a commission rate established, that commission rate is set, so that covers their operations and maintenance.
So the only thing that really effects the price of the subsidy to the private operators is the price of fuel and the transportation cost that more protects the price the subsidy change each year on the international markets and inventory carrying costs and the financing costs.
The rest of these costs like a vehicle financing cost, all that is tied into a commission rate that was fixed at the time the contracts were signed.
So what we are seeing now in a lot of the cases is that the cost of the retail prices of fuel increased on the international markets and with the retail prices the level in those communities are uneven.
Those two communities are unable to recover their operating costs and in a situation like that this is where we reimburse.
Basically we are paying him for the extra cost that he incurred for the fuel, the transportation, and the inventory financing costs.
Mr. Arvaluk your time is up and I think you had two more questions so we will let you go ahead and continue with your questions before we move on to another member.