Future oil royalties could pay for infrastructure, Nunavut premier says

Nunavut Premier Peter Taptuna speaks at the opening of the Nunavut Economic Forum’s Sivimmut IV Conference, Dec. 1, as conference chair Pauloosie Suvega looks on. The premier says the territory must find new ways to cover its high electricity costs and infrastructure deficit. (PHOTO BY PETER VARGA)

Cathy Towtongie, president of Nunavut Tunngavik Inc., cautioned that Nunavut must not become over-reliant on mining and other natural resources as its economy develops. (PHOTO BY PETER VARGA)

If the federal government can’t help finance Nunavut’s proposed hydropower or other alternatives to diesel-fuelled power generation, the territory will have to find its own sources of funding through economic activity, Premier Peter Taptuna says.

One way to do that is by generating revenue through royalties on oil and gas extraction, the Nunavut premier told Nunatsiaq News, Dec. 1.

The territory’s massive infrastructure deficit, which he estimates at around $6 billion, holds back Nunavut’s economic development, he said.

That deficit includes the lack of roads, marine harbours, waste facilities — but most importantly, alternatives to diesel fuel-generated power, which takes up a large portion of the government budget, Taptuna said at the most recent meeting of the Nunavut Economic Forum in Iqaluit.

“There’s a lot of talk out there about alternative energy, and the possibility of building hydro dams for alternative energy,” the premier told Nunatsiaq News at the opening evening of the three-day conference.

“But to get to that point, you need a lot of money. If the feds can’t give that money to us, then we have to earn it somehow. And how can we do that? Possibly through oil royalties, so we can actually start working on alternative energy.”

“Without an influx of some kind of revenues being generated into the government, there’s very little opportunity for us to get to that point of actually building hydro alternative energy.”

Nunavut has no oil and gas industry. The territorial government promises to firm up its policy on exploration and development, starting in January.

Taptuna pointed out that a proposed hydro project near Iqaluit by the government-owned Qulliq Energy Corp., which generates and supplies power to all of Nunavut’s communities, could cost up to $500 million.

That project would supply power to Iqaluit and possibly other communities of the Baffin region. The government favours construction of hydro plants in other regions, but has no means to do it.

“Where’s that money going to come from? It’s highly unlikely we’ll get it from the feds,” he said. “We’ll have to go out there and earn it.”

The Premier recalled that Newfoundland and Labrador succeeded in funding a $6.7 billion hydro plant, which the province funded from royalties on oil revenues.

That’s a reference to the big Muskrat Falls development on the Churchill River in Labrador, now under construction.

“We want to get to that point where we’re able to do that,” Taptuna told Nunatsiaq News.

Taptuna opened the Nunavut Economic Forum’s Sivimmut IV conference with a brief speech, in which he highlighted the need to improve education and training opportunities for Nunavummiut, but did not mention the possibility of royalties from oil and gas.

The territory shows high potential for development based on mining in particular, as well as fisheries and other activity based on natural resources, he told delegates at the conference.

But, “development can’t be realized unless northerners have the opportunity to find employment in these very important sectors,” he said

“Education is crucial, as training is the foundation for that equation.”

Cathy Towntongie, president of Nunavut Tunngavik Inc., followed Taptuna with an opening address on behalf of her organization.

She agreed with the premier about education, and the territory’s “massive” infrastructure deficit, adding that Nunavut has not benefited from “federal legacy projects” as other parts of Canada have.

“When British Columbia entered Confederation, the Canadian government built a railway all the way to Vancouver,” she said. “This was a massive expenditure. This critical piece of infrastructure is the foundation of Western Canada.”

All other provinces and territories “have acquired funding for secure infrastructure through past federal legacy projects,” Towtongie told delegates and guests of the conference.

“In this room, we are all aware that Nunavut’s infrastructure deficit prevents the territory from fully meeting its economic potential.

“To be equal partners of Canada, Nunavut needs similar investment from the government of Canada.”

Towtongie noted that the territorial government and regional leaders have already identified a list of projects they would like to fulfill, such as ports, small craft harbour facilities, a Manitoba-to-Kivalliq road, and hydroelectric plants.

The NTI president cautioned that the territory must not become over-reliant on mining and extraction of natural resources.

“Successful development of Nunavut’s economy must focus on creating diversity,” she said. “As we have seen I recent years, the policy focus has been on pure resource sector,” she added, singling out mining.

“It worries me as an Inuit leader, because mining is ‘boom and bust.’ It has a lifespan, and after that, it closes down.

“So you and I have to be prepared when mining leaves, and the wealth of Nunavut leaves us. What type of long-term sustainable development do we want to see?”

The Nunavut Economic Forum draws together representatives from government, regional Inuit organizations, business representatives and community groups, who will lay the groundwork for a “Nunavut Economic Development Strategy,” which will serve as a guideline for the territory’s economic development policy for the next decade.

The total cost of holding the Nunavut Economic Forum is $443,000.

The federal government, through the Canadian Northern Economic Development Agency, is kicking in $190,000 to help pay for the conference and the strategy, CanNor said Dec. 1 in a press release.

The GN is contributing $230,000 and conference sponsors are putting in $30,000.

The group’s Sivummut IV conference runs Dec. 1 to Dec. 4 in Iqaluit.