Premier defends N.S.-Daewoo deal

There is no guarantee Nova Scotia taxpayers' stake in a wind turbine plant will result in any potential profits flowing into provincial coffers, Premier Darrell Dexter said Thursday.

The decision on what happens to any profits in the government's joint venture with South Korean manufacturing giant Daewoo Shipbuilding and Marine Engineering Inc. at the former TrentonWorks railcar factory will be made by the new company's board of directors, Dexter said outside a cabinet meeting.

Earlier this week, Economic Development Minister Percy Paris said any profits from the province's 49 per cent share of the company would go into provincial coffers.

But Dexter said the board, which will have one member from the province, could either decide to pay out any profits in dividends, retain them as earnings for a set period, or use the money to reinvest in the company. The premier said the province would benefit under any of those scenarios.

"If the capital value of the company goes up because of reinvestment, then that means the 49 per cent share to the province increases in value," said Dexter.  "The idea that the choice between dividends and investment in the company is somehow a bad thing, I don't think really bears any real scrutiny."

Senior government officials have been downplaying the risks taxpayers face in the joint venture, which was announced last week.

They've expressed confidence in Daewoo Shipbuilding as a strong partner with nearly US$11 billion in revenues.

Nova Scotia has sunk $60 million into the $90-million deal that will see the company manufacture components for wind turbines including support towers and rotor blades. Some $40 million of that figure is comprised of various loans for capital and the purchase of the mothballed plant's assets from its receivers.

Opposition questions investment

On Thursday, Dexter rejected the charge from Liberal Leader Stephen McNeil that the province had given Daewoo a "sweetheart deal." He said he believed there were great opportunities to come.

"I believe we got a deal that's beneficial to both DSME (Daewoo) and the province of Nova Scotia," Dexter said. "Their expertise in wind, but also in steel fabrication, means there are a lot of associated industries where they can play a role in this province for export."

McNeil dismissed Dexter's arguments, saying it wasn't a given that the venture would be a success.

"It appears the 49 per cent equity stake that we've taken in this company really doesn't mean anything other than the fact we'll be on the hook for any future losses … and without any benefit of receiving the profit if it's successful," said McNeil.

McNeil wondered why Daewoo wasn't willing to invest more money if the business case was so strong.

"We're at the table when it comes to anteing up the money and now the company apparently has all of the guarantee of the profit and we're just there in case there are any losses. How is that good for Nova Scotia?" he asked.

Daewoo's operation in Trenton will be its first attempt at manufacturing for the wind energy sector.

Officials have said the project should create 120 jobs in the first year and up to 500 over three years once the plant gears up for production in September.