Thank you, Mr. Speaker. The Department of Public Works and Services has always been a major contributor to business development in the Northwest Territories as it carries out its responsibilities for capital project management and government purchasing. However, it has even greater potential for promoting business development through the continuing devolution of responsibilities to the private sector for providing petroleum products to communities. This will be one of the government's continuing priorities with a goal of privatizing as much as possible in time for the 1997-98 transportation season.
Over the years, the GNWT has made a conscious effort to increase private sector involvement in community fuel supply and delivery. The next step in the move towards fully privatizing this service across the Northwest Territories is to restore health to the petroleum products revolving fund. At the moment, the $50 million business is in financial difficulty. The accumulated deficit for the petroleum products revolving fund has increased to $2.7 million this year. Obviously, the first step in promoting this as a viable economic opportunity is to balance the budget.
Two recent initiatives by the department should help us to achieve that objective by the end of 1996-97. The first was an award in early April to the Northern Transportation Company Ltd. for the Eastern Arctic fuel resupply. For the first time, a northern carrier will be responsible for obtaining petroleum products and delivering them to all the communities of the Eastern Arctic. This award is expected to save $1.5 million over the three years of the contract. Negotiations are under way separately for the Iqaluit fuel resupply which is expected to achieve additional cost savings. I will report to the Members of this House when the award is finalized.
The second initiative on the road to fiscal health for this important program was the award on April 24, 1996, of the Western Arctic fuel resupply. A contract was awarded to Imperial Oil Ltd. to supply fuel to the Northwest Territories Power Corporation in the Kitikmeot and Inuvik regions for three years and to the Government of the Northwest Territories which, in turn, sells the fuel to customers in the communities, including businesses, private consumers, municipal governments and housing associations.
This is the first time the western fuel resupply contract has been awarded as a result of the competitive process. Previously, all Western Arctic fuel was purchased from Imperial Oil's refinery at Norman Wells through a negotiated agreement. While we were not able to negotiate a contract with Imperial Oil out of its Norman Wells refinery, the government decided to proceed with a call for proposals to get the best possible deal on the fuel resupply. Imperial Oil's proposal to deliver fuel to Hay River by rail achieved those objectives. This arrangement will save $2.8 million over three years through a contract with Imperial Oil Ltd. for the provision of the fuel products and a contract with the Northern Transportation Company Ltd. for delivery. The Northern Transportation Company Ltd. contract will strengthen the marine transportation option in the Western Arctic and stabilize freight rates for all cargo in 1996.
An unfortunate outcome of this award is that it might be necessary for Imperial Oil Ltd. to close down their refinery portion of their Norman Wells operation. However, in view of the obvious benefits to all Western Arctic residents of stabilized fuel prices, it is clear that the economic benefits offset the negative impacts on the community of Norman Wells.
Mr. Speaker, these awards should allow us to deal with some long-standing financial problems and promote this privatization initiative as a solid economic opportunity that could have considerable benefits to our business sector. I will be approaching the Standing Committee on Infrastructure to provide them with the privatization plan for the petroleum products division within the next two months. In the meantime, I am confident that these recent awards will result in a stable supply of petroleum products at a price which northerners can afford.
The next step in the department's efforts to enhance private sector capability, is the proposed privatization of the systems and communications division in Yellowknife. I will be coming forward in the near future, Mr. Speaker, to provide more details on that initiative. Thank you, Mr. Speaker.