A nearly 20-year-old investment by a previous government will finance the Saskatchewan NDP’s newest initiative to deal with climate change.
Premier Lorne Calvert said that after 18 months of looking for a buyer, the government has found one for its half-interest in NewGrade Energy Inc., the heavy oil upgrader in Regina.
“We have substantially achieved all of the original objectives of the investment,” he said.
Most of the sale proceeds will go into a $320 million Green Future Fund to help the province meet climate change commitments.
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Calvert declined to name the buyer at the Sept. 5 announcement, saying the name of the publicly traded company wouldn’t be released until the transaction is complete.
But Scott Banda, vice-president of legal and corporate affairs at Federated Co-operatives Ltd., said FCL’s Consumers’ Co-operative Refinery Ltd. subsidiary has right of first refusal as the government’s partner.
“They will probably sell,” Banda said in an interview. “To whom is probably a question.”
The government and the Co-op refinery have been partners in NewGrade since it was built in 1988 under the Grant Devine Progressive Conservative administration at a capital cost of $770 million. It started to turn a profit in 1996 and paid its first dividends to the province in 2003.
Calvert said the province has made its “initial investment well back.” Its decision to sell comes as FCL plans a $1 billion expansion of the refinery.
Banda said the company has 60 days to consider whether it will exercise its first refusal right on the upgrader sale. It knew the province wanted to sell.
“The issue around that is determining what is fair market value,” he said.
Calvert said the sale is worth about $400 million.
Of that, $75 million will be part of the Crown Investment Corporation’s 2007 dividend payment to the province’s general revenue fund.
The capital going into the Green Future Fund will be invested in government, business and non-profit initiatives as follows: $125 million for carbon capture and storage in the oil and gas and electricity sectors; $100 million for conservation and efficiency; $75 million to increase renewable energy use; and $20 million to reduce methane and other emissions from the energy and agriculture sectors.
The premier also announced he would serve as minister responsible for a new climate change secretariat, with an annual budget of $1.5 million.
“Its mandate will be to oversee all of government’s climate change strategy and initiatives and provide leadership as necessary,” he said.
Meanwhile, the government and SaskPower announced Sept. 6 that future electrical needs will be met through the installation of up to 400 megawatts of simple cycle natural gas turbines, at a cost of about $525 million.
As well, it plans to expand wind power, waste heat recovery projects and conservation initiatives.
