On March 3, the Government of Newfoundland and Labrador made a public commitment to invest in a floating drydock. Over a month later, information continues to be sparse on exactly what top decision-makers knew about the potential cost and risk associated with the project before making that commitment.

Atlantic Business Magazine has been trying to establish details, including what information the government members had to support their decisions on the drydock. A request was made March 11 for any records with the Department of Finance showing any valuation and/or financial risk assessment for what was announced. Filed under access to information legislation, a response on April 9 states the department has “no responsive records.”

Premier Tony Wakeham made a public commitment to fully fund the construction of the drydock, a major piece of infrastructure, at the same time as the announcement of a benefits agreement on the Bay du Nord offshore oil project in St. John’s. The benefits deal includes $200 million for a “fabrication fund.”

The government has yet to release the text of that agreement, but speaking with Atlantic Business Magazine, Energy Minister Lloyd Parrott confirmed the fabrication fund was not specific to a drydock. It was the provincial government that made the decision to commit those funds to the drydock build.

The total cost of the drydock construction is expected to exceed the fabrication fund by hundreds of millions of dollars. Notably, estimates for the project are only at a concept level and can’t be relied upon for anything but the roughest idea of a possible, real cost. It also doesn’t cover the long-term cost of ownership of the facility.

According to Premier Wakeham and Minister Parrott, work on a more reliable cost estimate for the build will be commissioned in the coming year. Funding for that estimate has already been allocated in the provincial budget.

When it comes to the $200 million fabrication fund included with the Bay du Nord agreement, it remains unclear what other projects, if any, were considered as alternatives.

For the drydock, already being promoted as the largest in Eastern Canada, there have been references to meetings with the province’s oil and gas corporation. A concept-level engineering study was also commissioned through the corporation. However, neither the spending options for the fabrication fund, nor the broader financial well-being of the province, are OilCo’s responsibility.

Newfoundland and Labrador has a rough record with public spending when it comes to developing new, or expanding existing, industries. One infamous example is the Sprung Greenhouse scandal. It involved a provincial commitment in 1987 to an industrial greenhouse project led by Calgary businessman Philip Sprung. The province contracted for an $11.4-million public spend on the project and eventually lost $22 million. It became the subject of a Royal Commission, one that found the province didn’t really understand the business it was getting into. Using an inflation calculator, the financial losses would amount to about $54.2 million today. We reference it here to provide some scale to the possible financial risk inherent in current decisions.

Atlantic Business Magazine is awaiting response on other, related requests for information on the drydock commitment and is told responses on these additional files — as of now — can be expected in late April and mid-May.

Aside from any additional reporting here, responses to all access to information requests put to the Government of Newfoundland and Labrador are expected to be posted online for open review by the public, a few days after responses are released to applicants.

The fabrication fund from the Bay du Nord development will not flow to the province if that project does not move ahead. A final investment decision is expected in 2027.

---

• For more Web Exclusives, click here.