P3 a sure thing in Arviat
GN agrees on new funding initiative
IQALUIT (May 24/99) - Just five days after tabling a balanced budget in the legislature, Finance Minister Kelvin Ng announced on Wednesday afternoon that a new trend in funding the construction of Nunavut's needed infrastructure was about to take off.
Because of the shortfall of available capital dollars in the new territory, the Government of Nunavut (GN) necessarily continued on with the GNWT's work in examining the possibility of using Public-Private Partnerships (P3) to fund the construction of new facilities.
After agreeing in principle to using such alternatives during a cabinet retreat in Kimmirut last month, Ng announced in the legislative assembly that the GN had signed a P3 agreement with the Arviat Development Corp. to build a long overdue health centre in Arviat. The agreement is significant in that it is the first time P3 funding has been used in Nunavut or the NWT.
"It's a 20-year, $10- million operating lease. That includes the capital and the operating component," said Ng. "It's good value for the Government of Nunavut."
Under the agreement, the birthright corporation fronts the money for the $6-million building and then leases it back to the government for $500,000 a year for 20 years. Ng said the deal was a good one for all the parties involved and that, in particular, it was a good move for the corporation.
"They get a return on their capital investment, they get to operate the facility and get a small return on that, they have an investment in their portfolio and it's the spirit of assisting the community in bringing forward this facility," said Ng.
Health Minister Ed Picco noted that along with enhancing the delivery of health and social services in Nunavut, the pioneer agreement would set the foundation for bringing similar funding agreements into being for the other three health centres that are in the works.
"We're hoping to move forward. Arviat is a key ingredient because it's a test case on P3s and we're excited about it," said Picco.
Corporation representatives, who were in Iqaluit for the announcement, said the agreement was a good investment for the hamlet.
"It's good because the money will be going right to the community," said Joe Manik.
His colleague Guy Alikut added that they hoped to be involved in similar funding projects for other needed facilities in Arviat in the future.
"We're hoping for something. There will be other things that are going to come up and there's no capital, so it's a good way to start Nunavut," said Alikut.
The MLA for the community, Kevin O'Brien, also threw his support behind the announcement. He added that while he would have preferred to see the health centre built out of the capital budget, a P3 initiative was the next best option.
"We've been waiting for such a long time. The existing building is 50-years- old," said O'Brien.
"They've struck a deal that's there for the development corporation, it's there for the Government of Nunavut and it's great for the people of Arviat. I think that's the bottom line -- we need this facility."