REGINA – Plans to set up three new ethanol plants in Saskatchewan have been upset by news that the government probably won’t give them a tax break.
“Basically, what it does for National Ethanol (Marketing Corporation) is it shoots them in the kneecap,” said Del Shafer of the consortium which wants to build plants in Rosthern, Debden and near Grenfell, Sask.
Two of the plants are now on hold, Shafer said, but the one in the Grenfell area will probably go ahead.
National Ethanol had asked for a tax cut of 15 cents per litre on ethanol produced in its three proposed plants, but was recently told it wasn’t likely to get it.
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Consortium frustrated
This doesn’t sit well with the consortium. Delmer Strobel of the Rosthern project said people in his group are frustrated since they were told by Saskatchewan agriculture minister Darrel Cunningham and economic development minister Dwain Lingenfelter that value-added industry was the way to go.
“And here they turn a great reverse,” Strobel said.
Cunningham said he supports the ethanol industry and thinks it has a good future, but he wants to proceed cautiously with government help and “we don’t want to mislead any group with the idea that (a tax break) is imminent and they go ahead with their plans counting on it.”
“We need to see business plans and market specific contracts before you really know if it’s possible or viable,” he said. “What they (National Ethanol) are asking for is a pretty small tax break essentially, and it’s a question whether that will make them viable.”
He said the business plans only project 20 percent of the ethanol produced to be used in Saskatchewan, so the benefits of a tax cut to them would be relatively small.
But providing a tax break on ethanol-blended gasoline sold in Saskatchewan could also help out-of-province producers, he said.
Because of trade agreements, fuel tax breaks cannot only be given to Saskatchewan ethanol producers and the province doesn’t want to subsidize companies that operate giant plants in another province or country, Cunningham said.
“If we’re going to use taxpayers’ money to subsidize the industry, we want to do it in a way that helps the local industry.”
