HALIFAX – A deal to acquire a vast tract of land from Resolute Forest Products Ltd. in southwestern Nova Scotia won’t have a major impact on the province’s finances, Premier Darrell Dexter said Tuesday.
Under the $1 transaction, the province is acquiring 220,000 hectares of woodlands — roughly half the size of the Montreal metropolitan area — but will also add $117.7 million to the province’s debt of $13.3 billion.
But Dexter said he expects licences and stumpage fees from harvesting the land would help offset debt servicing costs.
“It’s not actually going to affect the balance in any significant way,” Dexter said. “The stumpage rates that will be paid and any Crown licences that are let will essentially pay the debt servicing costs.”
Officials with the Natural Resources Department said the province anticipates it will get about $4 million annually from stumpage fees alone.
Dexter said taking on the debt was a factor that the government weighed before finalizing the deal, but ultimately he believes it was the right decision.
“It is and it was a heavy consideration for us when you talk about adding to the debt of the province, because everything that you pile into that creates further stresses in the future, particularly in difficult economic times,” he said.
The government has promised to balance the books in the spring — a commitment Dexter said has become more challenging but still possible to meet.
“I wish I could tell you it was getting easier everyday. That’s not the case,” he said. “We’re working hard toward that and we are still on that track.”
The deal announced Monday night will see the province gain $150.4 million in assets in all, including the land, a power generating facility and the former Bowater Mersey mill site. The government will also assume $136.4 million in liabilities including the pension plan for former mill workers.
Government officials say the assets will be used to fully fund the pension plan, which has a liability of $100 million.
Officials also said an agreement has been signed with private Nova Scotia utility company Emera (TSX:EMA) to sell the Brooklyn Power power generating facility for $25 million, although a closing date has not been finalized. It’s also not clear whether the sale would be subject to the approval of the Nova Scotia Utility and Review Board.
Liberal energy critic Andrew Younger issued a statement saying the government should have issued a request for proposals to determine whether there would be others aside from Emera interested in buying the power plant.
The deal did not include the purchase of the Oakwood sawmill because of concerns that provincial involvement with that asset would contravene the softwood lumber agreement with the U.S.