GN goes it alone on gasoline payout

PATRICIA D’SOUZA

The government of Nunavut announced a massive compensation plan last week that could mean hundreds of thousands of dollars in payments to snowmobile owners who incurred engine damage as a result of bad gasoline.

However, Finance Minister Kelvin Ng still does not know how much the plan could cost the government or how much the GN can afford to pay.

“We’re prepared to reimburse individuals for costs that they’ve incurred,” Ng said. “I don’t think those individuals should be out of pocket for the costs that they’ve incurred.”

Ng said the government has a “moral responsibility” to pay for engine damage caused by a faulty product purchased by the GN. “Our role was to be sure the quality of the product was there,” he said.

He added that he hoped the GN could eventually “work it out with the supplier and the insurer.”

However, the supplier, Northern Transportation Company Ltd. (NTCL), has not been asked to contribute to the compensation plan, according to Kirk Vander Ploeg, marketing manager for NTCL.

NTCL acquired the gas through a broker from Duke Energy of New Jersey. Duke Energy is a multinational energy company with offices in Europe, South America and the Asia Pacific region. The company is based in Houston, Texas.

The company had no knowledge of the problems snowmobile owners in Nunavut have been experiencing. Sara MacIntosh, manager of the company’s Vancouver office, said Duke Energy has no pipelines into Canada and does not normally distribute gasoline here.

However, Vander Ploeg said that because the product was purchased through a broker, it is not unusual for the company to be unaware of who purchased the gasoline or its ultimate destination.

He would not indicate whether Duke Energy might have some responsibility in paying for engine damage.

“Worst-case scenario”

According to a backgrounder provided by the GN, not only does the gasoline in the Baffin and Kivalliq regions lack a required deposit control additive, it also contains chemicals that are known to clog engines.

“Extensive laboratory testing has indicated that this gasoline has extremely high levels of certain component chemicals normally found in gasoline in trace or extremely low concentrations. These components in high concentrations have been associated with engine deposits,” the document says.

Not only does the gasoline lack a chemical to reduce deposits, it actually contains a chemical that causes them.

Further tests are being conducted in Rankin Inlet, Ng said, to determine if the bad gasoline is usable if it is mixed with two parts gasoline from Kugluktuk’s shipment, which has not caused any problems in the area. That gasoline originated from a refinery in Strathcona, Alberta.

If that doesn’t work, the GN will be forced to replace the bad gasoline immediately with a new supply that would have to be flown in to the 10 communities in the Baffin and Kivalliq regions experiencing problems.

However, Ng said he would “hate to even guess” how much it might cost to fly in a new supply of gasoline.

“It’s a worst-case scenario,” he said.

Payments by the end of June?

The GN’s compensation plan asks snowmobile owners in the Baffin and Kivalliq regions to submit receipts for engine repairs to community wildlife officers. Receipts must be for repairs made since the fall. They will be collected until June 7.

But that’s not all. They will also be asked to fill out a form “that will entitle them to be considered for compensation,” a GN press release says.

All this paperwork will be gathered by the department of finance in June to determine the extent of the problems and the costs associated with repairing damaged engines.

The department plans to begin making payments by the end of June. However, payments will be based on the average cost incurred by snowmobile owners.

Owners who paid costs substantially more than the average will be able to appeal to the department individually. However, owners who paid substantially less than the average will be entitled to more than they are owed.

The Alberta Research Council (ARC) is beginning tests on outboard motors, all-terrain vehicles and cars and trucks. Last weekend, a single outboard motor was tested “under practical hunting conditions” in Rankin Inlet. Two outboard motors have also been sent to the ARC’s Edmonton lab for testing.

In addition, two car or truck engines — one from the Baffin region, one from the Kivalliq region — will be torn apart by the ARC and inspected.

To further relieve angry vehicle-owners in the two regions, the GN is reducing the price of gas by 30 per cent beginning Saturday.

“Revised specification”

The ARC has developed a “revised specification for gasoline” the GN backgrounder says.

This specification is meant to ensure that the 2002 gasoline supply for the Baffin and Kivalliq regions has characteristics similar to the current Kugluktuk gasoline.

“This specification has been shared with NTCL, the supplier for 2002,” the backgrounder says.

This is the final year in NTCL’s two-year fuel supply contract. The company’s contract is for the supply and transportation of gasoline.

A request for proposals for next year’s supply splits supply and transportation into two separate contracts.

The supply RFP is due at the end of the month. Vander Ploeg said NTCL has not decided whether it will submit a proposal.