Committee, we’re on
page 31. We’ll come back to that page after we’ve concluded the department. Budget, treasury and debt management, infrastructure investments, $91 million. Mr. Dolynny.
Debates of Oct. 1st, 2015
This is page numbers 6559 – 6620 of the Hansard for the 17th Assembly, 5th Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was know.
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Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Daryl Dolynny Range Lake
Thank you, Mr. Chair. I’d like to
welcome the Minister and the department here to
day. This looks like it’s a one item aspect or detail.
This looks like it’s the fibre optic link at the $91 million mark here, so this will probably be our last opportunity to ask questions specific to this large piece of infrastructure. It appears now that the fibre link is finished and we’re now seeing it actually on the books, and I’m assuming it will be taken care of in public accounts in the same way. We know that this originally started off around a $65 million project, and through about a year or two it did escalate to the number we have today.
I guess my first question is to maybe if I can get a broader scope. What was involved with the overall cost and budget of this P3 initiative to go from a $65 million project to now the $91 million that we have on the books? Thank you, Mr. Chair.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Michael Miltenberger Thebacha
Thank you, Mr. Chairman. The project started out in its initial conceptual stages with a range somewhere between 65 and I think it was 85 million dollars. As the estimating got finer and the numbers hardened up, it moved to the higher end of the scale. When we did certain things like double the size of the cable from 24 pair to 48 pair to give it a lot of capacity, those types of things added cost as well. But I’ll ask the deputy, Mr. Chair, with your agreement, if he wants to add more detail. Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Aumond
Thank you, Mr. Chair. I guess there are four causes for the price to escalate from when we first did the feasibility study until we got to the business case. One, as the Minister had stated, you know, doubling the capacity of the fibre itself was a
cost-driver, along with the drilling costs associated with the four main river crossings that we had to deal with.
The other thing is just the timing from the time we did the feasibility study to the time we went out to procurement, you know, just the cost of the line itself increased, generally speaking. Again, a change in some of the pieces of the equipment from 2011 to 2014 to take advantage of some technological advances that took place also caused an increase in the price. Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Daryl Dolynny Range Lake
Thank you, Mr. Chair. I appreciate the response. For the most part, I think the Members on this side of the House were very supportive of this project. I know I have been and I’ve been able to see the merits in the long term for the residents of the Northwest Territories.
This is a P3 project, if you will, and I think we need to get an understanding of what does this really mean now that this project is finished or coming to completion and it’s now on our books. So to bring it to a conceptual number we can understand, proponents built this for the government, built this for the taxpayer and we’re now going to be making, I would assume, monthly payments, yearly payments to the proponents I would assume during a period of time. Again, they may want to qualify that. But at a point in time, once we pay this off from financing to maintenance fees to administration fees, what will be the final cost to this project at the end of its lifecycle when I believe we inherit this back as a full cost structure owned by GNWT? Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Aumond
With respect to this P3 procurement, it has a total capitalized cost of about $91 million. What we have done is the proponents will obviously use that asset over the concession period and it will drive revenue from customers, of which, you know, the government will be one as well. But primarily it will be the Inuvik Satellite Facility and the antennas there. What the government has done from a budgeting perspective is looked at what the revenue stream and what the growth of facility might be. What we’ll be doing is plugging that revenue gap to the tune of about $8 million a year, and that will go against the $91 million debt. As we pay that down over the concession period, we’ll have an asset that will still be deriving revenue for the government and providing services to the residents up and down the Mackenzie Valley. Unlike some other projects where you’ll have high maintenance cost and will not have a revenue stream to offset the cost, this asset will drive revenue and will become profitable for the government after a period of time. Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Daryl Dolynny Range Lake
Mr. Chair, unfortunately I didn’t
quite get an answer from that. I’m fully aware that this piece of equipment will generate a profit, and that profit will be pursuant to the number of satellite
dishes that are built in the Inuvik satellite area and how much money we’re going to generate per satellite. So I understand that component.
The question I have is that the price of this $91 million amortized
– and again, we’re making
payments to the proponents over a period of, again I’m not sure of the amortization of this. I use the word “amortization” because that’s the term I’m going to use, but paying back to the proponents this piece of equipment, there is an end cost that will cost taxpayers. What is that end cost minus the revenues? Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Michael Miltenberger Thebacha
Thank you, Mr. Chair. It doesn’t appear that we have that information here. We’ll have to agree to provide that to committee.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
The Chair Robert Bouchard
Mr. Miltenberger, I’m
sure everybody is trying to get commitment before the House is done, so will that be available?
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Daryl Dolynny Range Lake
Thank you, Mr. Chair, for your wisdom. That was a question I was going to ask, when we might be able to get that information.
Earlier, and again I don’t have the transcripts to go by, but I know the deputy minister indicated that part of the increase in the cost was due to the crossings. There were some crossings over some major rivers that possibly escalated the price. Was the original bid not including all river crossings? Again, I don’t have the original scope and mandate of the project, but I was led to believe, as a Member here, when this went out to tender, all river crossings were being looked at. What was so special that there was an incurred cost due to river crossings? Was there unsuspected terrain? What was the increase of the cost for those river crossings to do the horizontal drilling? Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Aumond
Thank you, Mr. Chair. Just for clarity, all the bids that we received included costing for the rivers. The cause in price was from our feasibility study to what the proponents provided. The information, when we did the feasibility study at the time, was based on the existing geophysical information that we have. However, the proponents, as a result of the procurement process, were able to take on more extensive studies, more geophysical studies of the valley, and as a result of that, the river crossings were more complicated and more difficult than we had originally envisioned, and that was responsible for the cost increase. Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Daryl Dolynny Range Lake
Thank you, Mr. Chair. Is it possible that when we tendered this out and were seeking proponents that even our geophysical assessments were possibly not complete? I’m just saying this because I remember some of the proponents who came forward said loud and clear that there were going to be some hurdles, that some of our geotechnical wasn’t exactly accurate, that this was going to cost more, thereby making the bid of the current proponent having a bit of an unfair advantage over what we already knew. Then when they started the work, they went,
“By the way, we’re going to need
more money because of the horizontal drilling cost. “Is it safe to say, was there a level playing field going into this that would have made this proponent on the same level as every other one applying and that this was not just a change order based on numbers that maybe we had in error that you were being held to task, Mr. Chair? Other proponents knew about this and yet they weren’t the successful proponent. I guess what I’m saying is, was there a level playing field, knowing what we know now, knowing what we could have done better in the so-called procurement stage of a P3 proponent? Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Michael Miltenberger Thebacha
Thank you, Mr. Chairman. Yes, there was a level playing field. Every proponent had the same information and there have been no change orders. Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
September 30th, 2015
Frederick Blake Jr. Mackenzie Delta
Thank you, Mr. Chair. I have just a few questions and comments. I guess with the project, it is really good to see this project going through my riding of Mackenzie Delta, a good portion of it. I know we had a number of people working on the project from both Fort McPherson and Tsiigehtchic and Aklavik, also a number from Inuvik as well. It is really what the region needed with infrastructure like this. This sort of work is new to us, to our region anyway. The area had to go through a lot of this wire that was put in place. We saw the process that was going to be taken at the opening but there was a number of areas that when the ground melted, the wire was exposed in many areas. That creates a lot of concern for my residents, for my constituents. A lot of them have a legitimate concern here.
Why wasn’t this cable put underground where it is supposed to be covered properly and not exposed to the elements? That sort of thing needs to be double- checked. I know they did a bunch of work this summer, but now we have to fix this problem. Thank you.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters