VICTORIA – Finance Minister Mike de Jong says the potential economic returns from British Columbia’s first liquefied-natural-gas deal will outweigh any targeted-tax tradeoffs included in a 25-year deal he expects to table in the legislature next week.
De Jong said Monday he expects British Columbians will support the blueprint for the largest private-sector investment in the province’s history that is valued at $36 billion, estimated to create 4,500 construction jobs and projected to generate $9 billion in government revenues in a decade.
He said B.C.’s entire forest industry generated between $550 million and $600 million for the province over the past five years.
The proposed multi-billion-dollar Petronas-backed Pacific NorthWest LNG export plant at Lelu Island near Prince Rupert is one of 19 proposed LNG facilities on the drawing board in B.C.
Under the project-development agreement that must be ratified in B.C.’s legislature, the Malaysian state-owned energy giant has two years to make the final investment decision to start its project.
“It is to my recollection the single largest private-sector investment in the history of the province,” de Jong said at a news conference at the legislature.
He likened the project-development agreement to a pathway that will allow the province to realize economic benefits.
“Most people will see that as a very reasonable and very rational trade off for the benefits that are about to accrue,” he said.
De Jong said the agreement will include assurances that Pacific NorthWest LNG will not face significant increases in specific taxes, including the LNG income tax, the carbon tax and the natural-gas tax credit. But he said the agreement does not protect the company from increases in provincial sales and corporate taxes.
De Jong said the agreement eliminates “discriminatory tax practices that single out a particular industry.”
Bruce Ralston, the Opposition New Democrats’ natural-gas critic, said it appears the government is about to protect the project from tax hikes for the next 25 years.
He said he’s also concerned Pacific NorthWest LNG has until the next B.C. election in 2017 to make its final decision on giving the project the green light.
“That’s very good for the company,” said Ralston. “I’m not sure that’s good enough for the citizens of B.C.”
Vancouver-based energy expert Ron Loborec said Petronas and B.C. are breaking new ground with their plans to build an LNG export industry on Canada’s West Coast.
“It is important symbolically,” said Loborec, who works for Deloitte and spent years in Australia working on LNG projects. “Petronas has been a front-runner in the industry. They really want to make a go of this. Gas, particularly LNG, is the most appropriate fuel we could use for a carbon emission step-down strategy globally.”