EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
With respect to the funds, I have personal knowledge of the expenditure of the funds as I was part of the QEC board, although I now sit in a different chair. I don’t recall the decision to place the project on (interpretation ends) permanent hold, (interpretation) and I can only reiterate some of the details of the earlier responses.
This project involved over $10 million in environmental studies of the area from about 2005 up to 2013 towards Iqaluit. The funds were expended on the studies adjacent to the river determined to have the best hydro potential where enough water could be dammed to generate electricity.
With that being the case, the studies on the different aspects of the environment were not completed. There would be more studies required on the adjacent environmental area, including marine bed studies that may be impacted.
Also, it includes the work for the environmental review read by the (interpretation ends) regulatory agencies (interpretation) that also include interveners.
Prior to the completion of these environmental baseline studies, the project was put on hold as the work required to address concerns would have added another $6 million or closer to $7 million for fiscal year 2014 just for the baseline studies. In adding the funds, it would have required over $16 million if it was to be continued, but it was not approved.
If this particular subject was needed and, as per my statement earlier, when details were provided, I can only repeat those details and if QEC had to fund this solely on their own, as the finance minister stated earlier, it would cost well over $300 million, even approaching $500 million.
QEC would have to recoup this cost through the existing electrical rates charged to their clients. Based on the current rates, QEC would not be able to pay for this project even if it was approved.
However, if we looked at outside sources of capital funds that are new, then the project would become more feasible and obviously the Qulliq Energy Corporation could move ahead or identify a new site.
Due to the lack of funding for the baseline studies, this project was unable to proceed any further.
If capital funds are provided for alternative energy sources such as hydroelectric projects, it would seem obvious to me that this project could be moved ahead, but again only if there are sufficient funds available to complete the entire project.
That is what has placed the project on permanent hold. I have identified these two reasons.
I now understand that the project is on permanent hold because of the lack of funds.
If I may change that word from permanent, it’s on indefinite hold and it is because of money.
Again, the Office of the Auditor General has met with the Qulliq Energy Corporation. Very little work has occurred over the years.
I recall when I was the Minister of the Qulliq Energy Corporation or even before I became the minister, they were telling me where they had some concerns. Then I became the minister.
They said that there has been no work. We’re going to have to move this from a work in progress to expenses.
It’s simply an accounting treatment to clean up the books for the public accounts and the Qulliq Energy Corporation financial statements.
As I said, it was a recognition that this project was going to become very expensive. It reached a point where the Qulliq Energy Corporation couldn’t proceed without an infusion of money. As I have said as the Minister of Finance many times, the Government of Nunavut doesn’t have the money to invest in a huge megaproject of this nature.
We remain hopeful at some point in the future that other investors may be out there, whether it’s the private sector or the federal government, but by ourselves as the Government of Nunavut and the Qulliq Energy Corporation, we simply could not afford to continue to sink money into this project.
If there was a decision to try to proceed, we would require... . As I said, these are class “X” type estimates in the $250 million to $500 million range. It was more or less a prudent financial decision by the Government of Nunavut, supported by the Office of the Auditor General.
The questions members have asked of Minister Mike, just for your information, since you weren’t aware where the questions came from, it comes from the QEC report on the study or by the Nunavut government report, which is what we are basing our questions on. That is for everyone’s information.
The answer I heard was that if funding can be found, this project may move forward. As I understand that possibility from Minister Peterson’s response and Minister Mike’s answer, members now understand that this project may restart if funding is ever found.
Does this mean that you are searching for funds to complete the project?
(interpretation ends) Are you actively looking for funding for this project?
I don’t believe we are actively looking for money or investors.
I just want further information. The $10 million is a huge amount to me. You indicated that it could have cost more if the study was to be continued.
You want to write off $10 million of expenditures and you said that it could cost an additional $6.5 million if you were to continue this study.
After spending $6.5 million, would you come back to the House to get additional funds?
How many times are we going to lose large amounts of money for this hydro project?
Hon. Keith Peterson: Thank you, Mr. Chairman. I thank Mr. Enook for the question. I’m just trying to remember the history.
I do believe they were seeking the $6.5 million. I think I was one of the decision-makers. I just can’t remember the dates.
We said no. The Government of Nunavut and the Qulliq Energy Corporation have said over the years that we have to be very fiscally prudent. To just simply study the project for the sake of studying didn’t make sense to us, especially if we were going down a path where it was appearing that it was going to cost hundreds and hundreds of millions of dollars.
Before you even get to that point, there are all kinds of regulatory hurdles you have to go through. That itself could cost you millions more. If anyone has gone through a major project permitting process, whether it’s for mines or other projects, it just didn’t make sense.
It’s not off the table. It does say “permanent,” but I apologize for that. Probably a better used word would have been “indefinite.”
We know that green energy is important for Nunavut. We have talked about it in this House. Other ministers and MLAs have asked those questions over the course of our three years in the last government.
I have to say right now that we would not approve $6.5 million. We’re just that short of money to contemplate that, unless there is an investor or another government out there willing to help us out.
I’m sure it’s going to be very easy to respond to, but we know that you can play around with numbers, moving them from one line to another.
We all know that we can scramble around the numbers.
There was an indication that the Office of the Auditor General made a recommendation about this subject. Now that you have received that recommendation, we have to approve this $10 million write-off.
What if we say no? What happens then?
Again, when we work with the Office of the Auditor General of Canada, as policymakers and legislators, we have to respect the advice that the Office of the Auditor General of Canada provides.
They have determined that this was a work in progress. There is no work happening on it, so it should move from the capital side to the expense side. We considered the advice very carefully and had some good discussions with them, as we have always over the years, and we respect that advice.
If we were not to approve the write-off of this $10,040,743.44 - I don’t know how they get it right down to the penny but they did - we would probably receive a qualified opinion, which is not a good thing for any government to receive.
Mr. Enook (interpretation): Thank you. (interpretation ends) Why would we be so upset with a qualified opinion?
Well, we have the public service accounting standards that are set for public governments. We would be in violation of those standards.
That’s why we should be concerned. It would reflect poorly on us as a government and it could signal to people that the Government of Nunavut through all of us are not good accountants of our money and it could signal to investment agencies that we’re not good managers.
I don’t know what would go through people’s minds, but there are organizations out there like Moody’s Investors and the Conference Board of Canada, who actually do read all provincial, territorial, and federal financial statements and they comment on them all the time. They assign credit ratings and such things that investors and others read.
I would caution us all to be very careful if we’re deciding not to write this amount off.
Even if that’s the case, we have expended $10 million plus and we want to approve the write-off.
If we write off $10 million, how would that make us good financial managers?
I’m sure Minister Peterson will respond, but I also seem to understand that no matter what we do, there’s not much we can do about it.
We don’t have much of an alternative. We will have to approve this write-off because it’s recommended by the Office of the Auditor General and we have to follow the accounting standards, whether we like or dislike the write-off of this $10 million.
Is that how you also understand it?
Again, we’re accountants.
We have to follow public sector accounting standards. This is just a process we’re going through to make sure that our financial statements are as accurate as they can be at the time when the Auditor General audits. They recommended moving the work in progress to expenses.
There has been a lot of work done identifying sites, researching sites, some engineering type work, and helicopters have flown over the area. That work is still valid.
It’s not like a generator, for example, at a power plant that has been removed from a community and is non-functional. This is the information that’s still there. It can be used again and updated.
It’s available. We have paid for it. It’s still available.
If the Qulliq Energy Corporation, the Government of Nunavut of the day, or a future government decides to proceed, then that information can be retrieved and used. Depending on what the determination is, it could be capitalized, then go forward with the project.
Mr. Chairman, I believe that the Premier wanted to add a few words.
Just to summarize a bit here, the project was initiated in 2005. Just like any other government, the governments are responsible for trying to investing in bringing the cost of living down for our territory.
That’s one of the key factors. In fact it is the main factor.
Mr. Chairman, although this was initiated in 2005, we went on for quite a few numbers of years. From what I can understand going back several years, some of these funds came from the federal government to initiate feasibility studies and environmental studies, including the feasibility of two different locations.
At the end of the day, if this particular infrastructure, which is going to cost in the hundreds of millions, is not going to bring the cost of living down for our residents of Nunavut, it’s simply a factor where we do not build infrastructure where it increases the cost of our living in the territory.
As you know, there’s one factor that’s not in here was the cost of oil back then. In some cases the cost of oil was around $140 a barrel and as members know, it went down below $40 a barrel at one point.
Although that’s one of the factors, we still want to make sure that with proper investing of the government, we find ways to invest in bringing the cost of living down for our people.
If this is not going to do it, certainly that doesn’t mean that’s going to be shelved. There’s always an opportunity to go back to it once it becomes more economical for the people of the territory.
We all know what you are talking about, Mr. Premier, and I agree with you completely.
I think we all agree with you. We always have to look for more efficient ways of living.
I’m not complaining about that.
What I was expressing are my concerns of having used a great amount of money. You used a great amount of money and you’re asking us to write off that money.
Now this project is not permanently stopped, so next time around you might then come to us and ask us for a write-off of that money again.
That’s the only thing I’m concerned about.
We will not be handling our money properly if that’s what we’re going to be doing.
My understanding from Minister Peterson is that no matter how much I complain about it, we have no choice but to do it because the Auditor General says that we have to do it.
If we don’t, we will just look bad. It’s too bad we weren’t told this right away. It would be better if you had told us, but there’s nothing you can do.
Welcome, Minister Peterson and your officials.
The former Peter Pitseolak School fire was said to have cost $14,680,209. Does that total price include an upgrade done to the school and an addition made to the school, which I believe was completed in 2010? Does that total reflect the money that was spent on the upgrade and extension?
Yes, that total included the addition.
Maybe the finance minister can tell us how much money the government spent when they were renovating and making additions to the school.
The total cost to the addition to the school was $17,335,054. Thank you, Mr. Chairman.
Can the minister tell us why the two figures are very different? For the Peter Pitseolak School building, before the renovations that cost $17 million for the upgrade and addition, we’re writing off $14 million. Can you explain that?
The remaining amount, $14,680,209, is the book value after the amortization of the addition between 2010 and 2015, when the school burned down.
We’re all aware that the capital items usually have insurance. The fact that there was no insurance for the school, we’re going to have to build a new school using the government’s money.
Can the minister give us an update to today if the entire infrastructure of the Nunavut government is insured?
I thank Mr. Joanasie for the good question.
Mr. Chairman, in that particular project, it was determined that it was underinsured.
There have been three schools in the past that had burned down, I believe.
The insurer decided that there would be a $10 million deductible. In essence we were to become self-insurers.
What happened with that project is we found out that the $17,335,054 had not been communicated to the insurance company.
When the school burned down, we learned that it was underinsured, so we couldn’t put a claim in for the remaining value of the school there, the book value.
I can assure Mr. Joanasie and other members that when the government learned what had happened, Community and Government Services and the Department of Finance quickly moved to remedy the issue and checked to make sure all our other buildings were properly on our books and the insurance company was aware of the value of those assets.
I’m pretty sure we’re okay there and all the buildings are adequately covered for insurance.
I apologize if I misspoke about saying that the school had no insurance. It just had inadequate insurance, as the minister explained.
When it comes to the government’s major infrastructure, they usually are upgraded or added to.
We approve the finances for them and when it’s for a major building, we see the cost of the building. Do you insure them at a higher total of the asset’s value?
I’ll ask my Deputy Minister of Finance, Mr. Chown, to answer that question.
On an initial acquisition of an asset, that asset would be insured at the value at the time of construction. It would be on the construction value.
Over time if an asset were to be upgraded, the process would be to add that additional amount to the valuation of the asset at that time to ensure the asset is properly insured.
Obviously in this particular situation, there was a communication error and the asset was underinsured.
Our Risk Management and Insurance Division has been working with the Department of Community and Government Services. We have done a full review of all the assets out there to revisit the valuation.
We’re continuing to work with them to ensure that we don’t have communication errors of this nature in the future so that we’re properly informed at the time of additions to capital assets.
I want to get away from the Peter Pitseolak School and move on to the Qulliq Energy Corporation’s requested $10 million write-off.
I think that’s a large amount of money. I know it has been used in the past 10 years. The minister also said that the information collected with that money can reused in the future.
Can the minister provide a breakdown of that $10,040,000 and the money that was spent on those studies that can be used again?
I don’t have all the details of all the studies.
I just want to comment. Sometimes you have to spend money to determine whether you should spend more money or not spend money.
In this case the decision-makers of the day between the years 2005 and 2010 were actively studying this project.
We figured out that 77 percent of the costs were incurred during that time. That’s when it started becoming apparent that this is going to be a massive undertaking with huge financial costs.
That’s the sort of value of undertaking a study. If you don’t undertake the studies, you will always be guessing like “What if?”
They were doing these studies and I think they looked at more than a dozen sites in the area and then they started narrowing it down.
I believe, after a while, through extensive consultations with individuals and organizations in this area, they narrowed it down to two locations and they were able to get some preliminary estimates. Again, it was $250 million to $500 million, which is a staggering amount of money for our territory. Globally or internationally it might not be that big of a project, but for us it was quite significant.
The value of the money that was spent and the studies that were completed helped us come to the realization that a project of this nature could not proceed without a further infusion of cash from investors or other levels of government. We couldn’t do it on our own.
As I said, this is an accounting exercise. We’re moving it from a work in progress because the Auditor General of Canada says that there is no work being done on it, so it can’t be capitalized. They also determined a lot of the work that was done should have probably been expensed at the time and not work in progress.
Again, as I said to Mr. Enook, there is valuable work that has been done and it can be used in the future.
If a decision is made to proceed, I’m sure the Qulliq Energy Corporation has all the reports, studies, and all that work in the office and online. I think there’s a lot of work that actually is online that can be referred to.
It’s not like $10 million, like I said, to a generator that’s never going to be used again.
This is work that can be used again and probably referred to by future decision-makers and any engineering firms, accounting firms, and others who could be retained by them to assist in making a determination should we proceed.
We usually don’t review the capital estimates for the Qulliq Energy Corporation and we don’t approve them in the House as they are done independently. We know that this project was started back in 2005. We don’t what to see this happen again.
What are you going to do to make sure that this does not occur again?
I know me, Minister Mike, former Minister of QEC Mr. Hickes, and former minister of QEC Ms. Ell-Kanayuk... .
Are there any other former ministers? This is all in the last four or five years we have all grappled with this.
I believe the Qulliq Energy Corporation is strengthening their capital planning processes and capital carryovers processes. I know Mr. Pereira has told me about some of the work he’s doing there so that there is more oversight of projects before they get to certain decision-making stages at the Qulliq Energy Corporation board of directors, to the minister and to the Financial Management Board.
If it came forward to the Financial Management Board, it would have to go through the Department of Finance.
We would work with the Qulliq Energy Corporation to make that determination to make sure that it is a project that fits within the mandate of the Government of Nunavut at that time in the future, and that there is a reasonable chance that we can secure investors and other levels of support.
Again, a lot of this has to make economic sense as well. We look at all those types of considerations.
I know it is quite challenging to just write off the asset. If we can imagine this scenario where an iceberg passes by and we place $10 million on top of it, with the knowledge it will leave with the currents, we are told not to bother with it and just leave it be.
It is impossible to just leave that amount aside and how to counter that is confusing.
Let me unequivocally state that I never want to see that occur again within this government or at least our government should ensure this never happens again. If we can perhaps make some amendments within the capital projects review mandate to ensure funding is available, but only if that could be agreed to.
Qulliq’s capital estimates are exempt from our review.
This then becomes just a commentary. Hopefully in the future their corporate capital estimates and projects can move forward successfully.
I know that Mr. Rumbolt was asking questions in regard to petroleum products, but I do want to ask for clarification in regard to evaporation and shrinkage of petroleum products.
The minister and the official had stated that due to the warm and cold temperatures, petroleum products shrink and expand.
Before I became a Member of the Legislative Assembly, I learned how to monitor petroleum products through KIA.
I’ll be asking questions based on my experience through the Kivalliq Inuit Association.
My first question is in regard to petroleum products. Does the write-off include the spillage, yes or no?
Mr. Chairman, with your permission, if I can bring my PPD expert back in to assist us with these answers.
Ms. Kimball, welcome back.
Do you want me to go directly to Ms. Kimball?
If a spillage occurs and we can quantify the amount that has been spilled, I believe we would record that as a separate transaction.
If it’s not quantifiable, then it would result in a difference in inventory from year to the end when you’re doing the dips.
If we have a known amount and we’re able to quantify that, we can do that separately as an entry in accounting.
If there was no spillage occurring, my next question is, in view of all the communities in Nunavut, aviation fuel has one container. Do the tanks have only one liner?
We definitely would have separate storage tanks in each community for each type of fuel. As to the exact number of tanks in each community, I don’t have that information with me.
Are holding tanks that are presently being pumped single-wall tanks or double-wall tanks?
That has nothing to do with the write-off.
We don’t have that information here.
I do recognize your statement, but at the same time a single-wall lined fuel holding tank does take into consideration heat and cold shrinkage, but a double-wall tank does make a difference on heat and cold shrinkage.
My next question here is, when we look at these petroleum products’ evaporations, when we look at avgas in one community and then jet A-1 chargeable variance, my knowledge according to this is when they are transported to communities, the caps on these drums are double-sealed. How do you account for the heat and cold shrinkage with these chargeable variances on these two particular issues?
I have to apologize to Mr. Mikkungwak.
We simply don’t have that level of detailed information about caps on containers and so on.
When we look at these chargeable variances regarding the Petroleum Products Division in this day and age, seeing that some areas are so substantial, are there future considerations as to minimize the substantial amounts?