Mr. Steen.

Thank you. Mr. Minister, you have the clarification.

Mr. Chairman, I would like to ask Mr. Lovely to respond to that.

Mr. Lovely.

Thank you, Mr. Chairman. I have to apologize. I am not clear that it actually is 10 years. I haven't been given that detail. I do know that it is a longerterm contract. The fuel supply for Iqaluit is a very large proportion of the Eastern Arctic fuel resupply. In 1996, Iqaluit received over 53 million litres of fuel. For the rest of the Territories, in 1995-96, the total resupply was 94.857 million. This Iqaluit contract is a large one that will be entered into with a consortium of Nunavut firms who will have to make a relatively large investment in order to get it off the ground. It was felt that a longer-term contract was needed to encourage them to get going on it.

This is a new requirement for the government because it was previously handled by the federal government. They are only turning it over to us for this coming season. So it will be the first time that we have an obligation in Iqaluit that previously has been handled by the federal government. It was our intention, rather than continuing the arrangements they had, to go out to tender and see if we could get a northern business interested in doing it rather than continuing the arrangements the federal government had with Shell Canada.

Thank you. Mr. Steen.

Thank you. Mr. Minister.

Mr. Chairman, legally, the department can go into a longer-term contract with this group. However, I should note that the new Nunavut government is not really under an obligation to take it on. When you take on longer-term contracts of this size, you achieve economies of scale. You save money. So it would be in their interest to take on the contract, rather than paying more for another newer or shorter-term contract. This is something that the Minister of Finance will be dealing with when he starts negotiating with Ottawa on the new formula funding arrangements. Hopefully, that will be quite soon. That question is a good one and it is something we are keeping an eye on.

Thank you. Mr. Steen.

Thank you. Mr. Minister.

Mr. Chairman, the amount of capital infrastructure that was needed was different and the one in Iqaluit required more. It required the new contractor to put more of an investment in whereas, in the Western Arctic fuel resupply, the infrastructure is already there. That is where the difference is.

Thank you. Mr. Steen.

Thank you, Mr. Steen. Mr. Minister.

Mr. Chairman, I haven't reviewed this particular file, so I am not up to date on it. I am going to ask the deputy minister to respond.

Thank you, Mr. Chairman. There was an earlier question about whether or not the department was proceeding with any privatization without coming back to the Infrastructure committee, for example, to talk it over. The answer that we gave is we aren't doing that. The Iqaluit situation is one where we don't have responsibility for that until September 1996. The federal government is currently handling it through an arrangement with Shell. We didn't consider it privatization to find a way to avoid taking on one more responsibility that we felt the private sector could handle. So when the question was asked about whether we were privatizing it, we didn't consider this privatizing of an existing government operation. It was avoiding taking on more responsibility for something the private sector could do. This is no different than a situation that we have in Inuvik, Hay River or Yellowknife where the community is large enough for the private sector to do this work outside of government.

So we did this to get a better price and it looks, with this longer-term contract, like we are going to be getting some significant returns and going to avoid taking on more responsibility at a time when we are trying to encourage the private sector growth.

Thank you. Mr. Steen.

Thank you. Mr. Minister.