Dempster fibre line could cost more than double initial estimate

The cost of building a fibre-optic line up the Dempster Highway has ballooned to somewhere between $50 million and $70 million, up from an initial estimate of $32 million.

The cost of building a fibre-optic line up the Dempster Highway has ballooned to somewhere between $50 million and $70 million, up from an initial estimate of $32 million.

The Yukon government is now reconsidering all options for building fibre redundancy in the territory, including a route south to Alaska instead of the proposed route from Dawson City to Inuvik.

“Everything’s on the table,” Economic Development Minister Ranj Pillai told the News.

The new price tag comes from a detailed engineering report completed by Northwestel in November 2016. That report has not been made public by the Yukon government.

But this week, Northwestel’s vice-president of business markets, Paul Gillard, mentioned the higher cost during a community meeting in Fort McPherson, N.W.T., according to a CBC story.

That story also mentions that Northwestel hopes to apply for permits in March and begin construction on the Dempster line in the winter.

Pillai said that’s news to him. He accused Northwestel of taking a “cavalier approach” in assuming the Dempster project is going ahead.

“Do (they) have an agreement with the Yukon government? No. Is there a timeline? No. Has there been a model that’s been negotiated or concluded with the Yukon government? No. There’s nothing in place,” he said. “I think they really need to explain themselves.”

In response, Northwestel spokesperson Andrew Anderson told the News the company’s understanding of the situation “is not different than the minister’s,” and Northwestel isn’t assuming the Dempster line is a done deal.

He said the company is seeking permits “in order to be shovel-ready should funding be available,” and is hoping to have the fibre loop complete by the beginning of 2019.

Anderson did not explain why the cost might be more than double the initial estimate, but Pillai said it has to do with the construction methods needed to build on permafrost.

The Dempster fibre project was announced by the former Yukon Party government in October 2015. The idea was to complete a fibre loop through the Yukon and the Northwest Territories, so that if the fibre line along the Alaska Highway were snipped by summer construction crews, the Yukon wouldn’t lose internet access.

The Dempster line was to connect to another fibre line currently under construction up the Mackenzie Valley from Fort Simpson to Inuvik.

At the time, Northwestel estimated construction would cost $32 million, of which the company would contribute $10 million. The rest was to be paid for by the territorial and federal governments, but no funding agreement has been reached. Northwestel was to own the line and cover all maintenance and operations costs.

But Northwestel’s detailed engineering report, presented to the Yukon government in November, now estimates the total cost at $50 million to $70 million. Anderson wouldn’t say whether the company would now contribute more than $10 million, given how the cost has inflated.

He said that’s part of Northwestel’s discussions with potential funding partners.

Pillai said the report cost $700,000, half of which was paid for by the Yukon government.

Before the Dempster project was announced in 2015, the territorial government had seemed to favour a fibre link south to Juneau, Alaska. But reports prepared by engineering consultant Stantec suggested the Yukon government would end up paying more for the Juneau line because it would have to cover operating costs and bandwidth lease fees.

That line also wouldn’t provide redundancy to the communities north of Whitehorse.

Now, however, it seems that route is back on the table. Pillai said the Liberal government is also reconsidering how the redundant line will be built and who might own it.

For instance, the Mackenzie Valley Fibre Link is owned by the Northwest Territories government, not by Northwestel.

“I’m looking at the model that’s in the Northwest Territories, I’m looking at joint ventures, I’m looking at building out a line but then potentially leasing it to a company, I’m looking at every option that’s available,” Pillai said.

Though the engineering report was completed several months ago, it has not been made public. Asked why, Anderson said it’s not Northwestel’s practice “to make public reports provided to clients or customers.” That decision falls to the client — in this case, the Yukon government.

But he said company representatives have been holding community meetings about the project in the Yukon, and have been answering questions about the cost when asked.

As to why the Yukon government hasn’t made the report public, Pillai said he thought Northwestel was planning to publish a summary in the “very near future.”

“My expectation is that everything to do with making a decision on fibre is going to be extremely public,” he said.

But Anderson said the company won’t publish any part of the report without the government’s say-so.

Pillai said the Yukon government is now working on a funding proposal for the federal government’s Connect to Innovate program, to be submitted April 20. He said it could include one or more possible fibre projects.

But he wasn’t sure whether the proposal will be made public, either.

“I don’t think so. That’s something we definitely have to discuss,” he said. “I don’t think it’s normal practice that the Yukon government makes all their proposals public before they submit them to the federal government.”

Contact Maura Forrest at maura.forrest@yukon-news.com

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