Thank you, Mr. Chairman. I am pleased to introduce Bill 8, An Act to Amend the Revolving Funds Act. The petroleum products division of the Department of Public Works and Services was established in 1972 to provide fuel sales dispensing and delivery services in those communities not serviced by the private sector. The petroleum products division currently provides these services in 15 communities across the Northwest Territories.
The petroleum products division administers the petroleum products revolving fund under the authority of the Revolving Funds Act and the Financial Administration Act. The revolving fund provides the resources to purchase and distribute the fuel consumed annually in the communities we serve. In accordance with the Revolving Funds Act, the petroleum products division is required to recover advances from the revolving fund through retail sales.
There is also a petroleum products stabilization fund that is intended to protect consumers from fluctuations in costs and minimize the need for frequent adjustments to retail fuel prices. Operational surpluses or losses at the end of each fiscal year are credited or charged respectively to their stabilization fund. Currently the maximum balance in the stabilization fund cannot exceed plus or minus $5 million at the end of any fiscal year. Should the balance at the end of any fiscal year be above the surplus of $5 million, the excess surplus is credited to the consolidated revenue fund. Deficit balances exceeding $5 million are charged to the Public Works and Services appropriation.
The maximum limit of the stabilization fund was established well before division of the Northwest Territories on April 1, 1999, when the petroleum products division served over 40 communities and had annual sales revenue of approximately $60 million.
Today, Mr. Chairman, only 15 communities are served with annual sales revenues of approximately $14 million. This is approximately an 80 percent reduction over pre-division levels. There is no longer a rationale for the stabilization fund to accommodate $5 million in profits or losses as the petroleum products division no longer has a customer base to service this level of debt without imposing undue hardship on consumers through drastic price increases.
Mr. Chairman, this fact was recognized in the 2002-03 fiscal year when the Legislative Assembly approved the write-off of $4.191 million deficit balance of the stabilization fund.
The current balance of the stabilization fund is a surplus of $472,000. The petroleum products division is projecting a loss of approximately $230,000 for the fiscal year 2005-06 which will be charged to the petroleum products stabilization fund resulting in a projected surplus of $242,000 as of March 31, 2006.
A new maximum limit of plus or minus $1 million will still fulfil the intent of the stabilization fund and more accurately reflect the maximum accumulated debt level that the petroleum products division can service without imposing drastic price increases on its customers. That concludes my opening remarks. Thank you, Mr. Chairman.