N.W.T. bought NTCL assets to preserve 'a lifeline' to remote communities

The N.W.T. government says it bid $7.5 million against a private Edmonton company to purchase the assets of Northern Transportation Company Ltd. to preserve "a lifeline for many remote N.W.T. communities and industries" down the Mackenzie River and along the Arctic coast.

"The investment was worth it," says John Vandenberg, an assistant deputy minister for the N.W.T.'s Department of Public Works and Services. "Ultimately we did need to protect our vulnerable communities. Our job here is to ensure that essential services are not interrupted."

In a press release and backgrounder issued Friday, the territorial government outlined both its motivations for the purchase and the process by which the government's initial offer of $4.5 million escalated to a final approved bid of $7.5 million.

• EXCLUSIVE | N.W.T. government makes $4.5M bid to buy assets of NTCL
• ​​$140M debt, which NTCL can't repay, could spread to Canadian North

Government feared private monopoly 

Edmonton-based 2006647 Alberta Ltd. initially put in a bid of $2.2 million, with the territorial government putting in its own bid of $4.5 million.

Then, on Thursday afternoon, a justice for the Court of Queen's Bench of Alberta allowed each party to make a second closed bid, submitted in a sealed envelope.

The amount of the Edmonton company's second, losing bid is not known, but the government was worried about what would happen if the company proved victorious.  

"In the event of that, N.W.T. stakeholders that depend on affordable marine transportation services would be at risk of facing a significant increase in marine freight rates, which would ultimately lead to a substantial increase in cost of living to residents," states the backgrounder.

Inventory: the government's new fleet 

The government's purchase includes:

• eight tugs;
• three oceangoing supply vessels;
• 57 barges;
• properties in Hay River, including NTCL's main shipyard and office, a mess hall and a deck cargo marshalling and handling yard;
• NTCL's office and warehouse in Norman Wells; terminals in Inuvik and Tuktoyaktuk; 
• and several out-of-service, first generation marine equipment assets and properties. 

The government says those assets are worth a combined $66 million, citing a publicly reported assessment not commissioned by the government. In May, NTCL's court-appointed monitor put the value of NTCL's property and equipment at $33.3 million.

Assessment of environmental liabilities to be done 

The government also acknowledged the environmental liabilities that come with some of those properties, and outlined for the first time the steps it will take to address them.

"The GNWT plans to undertake environmental site assessments of the land properties to determine the nature and extent of any environmental liabilities," according to the backgrounder.

Private partner to be sought 

The government is not about to enter the marine supply business, it stressed.

"It simply owns the infrastructure so that a private sector partner with expertise and experience can provide these important services to our communities. This is a similar concept to the water-bombing contract for fighting forest fires; the GNWT owns the planes, but contracts to the private sector to provide the services."

The government says it will seek an "expert" private sector partner to manage the fleet and transport fuel and goods to communities.

NTCL pensioners get a cut of deal

Over 200 former employees of NTCL, many of whom live in Hay River, N.W.T., will get a cut of the transaction between the NTCL and the government. 

According to terms finalized Friday, the pensioners will receive 21 per cent of the proceeds — about $1.6 million, plus another $1.2 million from previous asset sales. 

That's far short of the approximately $21 million hole in the pensioners' plan, which has been underfunded for years.