The new Canada infrastructure bank may not be the best tool for funding development projects in the Yukon, panellists at the Yukon Geoscience Forum & Trade Show suggested on Saturday.
The infrastructure bank was announced by federal Finance Minister Bill Morneau earlier this month, and is intended to attract private investment to finance major construction projects across the country.
But a panel discussion on Saturday raised doubts about whether the bank is the best way to fund infrastructure projects in the Yukon, which often don’t have any proven revenue streams with which to pay back the investment.
One of the major projects up for discussion was the Yukon Resource Gateway Project, which aims to build and upgrade roads to three major mine sites in the Yukon: Casino, Coffee and Selwyn.
The issue is that none of those mines is a sure thing yet. The Yukon is hoping to build the roads now to make the territory a more attractive jurisdiction for mining investment.
Kells Boland, a consultant with PROLOG Canada in Whitehorse, said the infrastructure bank might not fit that type of project.
“(Investors) are not going to be interested in building it to see if somebody will use it,” he told the News. “They’re going to want to know how they’re going to get their money back.”
Michael Catsi, with the Alaska Industrial Development and Export Authority, was also on the panel to explain how his organization finances projects across the border. AIDEA works at arm’s length from the state government to provide funding for development projects in Alaska through bonds and loan guarantees. He said the secret to AIDEA’s success is that it only invests in projects that it’s fairly certain will succeed.
“We’re not speculative investors,” he said. “We don’t build something, we don’t finance something in the hope that someday someone will come.”
Catsi said AIDEA would consider something like the mining roads project in Alaska, but only once the mines were permitted and ready to go.
“We’re not going to build it on a hope that they will develop,” he said. “We’ll actually build it when they’re ready to develop.”
On Tuesday, Morneau told the Canadian Federation of Municipalities that the federal infrastructure bank is designed to finance large projects with a revenue stream attached, like electricity transmission or public transit.
“The kinds of projects that are unlikely to fit the bill might be, you know, bridges or roads in smaller communities, for example,” he said.
Still, the infrastructure bank isn’t the only source of infrastructure funding available to the Yukon.
The Yukon has applied for direct federal funding for the resource gateway project through the New Building Canada Fund. It’s asking for Ottawa to pay for roughly 50 per cent of the project, with the remaining 50 per cent split between the Yukon government and the private sector. There has not yet been a decision about that application.
Another project up for discussion on Saturday was the proposed upgrade to the Stewart-Keno transmission line. It’s still unclear where funding might come from for that project. No formal application has been made to Ottawa.
The transmission line upgrades would have a revenue stream attached. But Yukon Energy president Andrew Hall said he’d be hesitant to apply to the infrastructure bank for that project, out of concern about having to hike utility rates to pay back the investment.
“In an ideal world, what we need is straight government funding, not debt, because funding allows you to keep the asset out of the rate base, which means it doesn’t impact the power prices that all of you pay.”
With files from the Canadian Press
Contact Maura Forrest at email@example.com