Canadian Manufacturing

Northern Gateway offer to First Nations could amount to $70K

The company says that is not the average offer, and in fact is in the lower range of a wide array of agreements.

TERRACE, B.C.—The equity offer from Northern Gateway to aboriginal groups along the route of a controversial oil pipeline would amount to as little as $70,000 a year for some bands, according to one base offer obtained by The Canadian Press.

The company says that is not the average offer, and in fact is in the lower range of a wide array of agreements, but some aboriginal leaders says it’s a far cry from the path out of poverty the company claims.

“Only minimal economic benefits were offered,” Chief Rose Laboucan, the six-term chief of the Driftpile Cree Nation northwest of Edmonton, told the federal panel assessing the project during final arguments about the controversial project.

Laboucan said the band sat down to negotiate with Calgary-based Enbridge but would not sign the equity agreement “for ethical reasons.”

Aboriginal buy-in is a major road block for the $6-billion project that would deliver heavy oil from just outside Edmonton to a tanker port in Kitimat, B.C.

Northern Gateway has offered aboriginal groups along the route the opportunity to buy into a 10 per cent equity stake in the pipeline. A copy of the offer was obtained by The Canadian Press.

A legal assessment for one of the bands compiled in 2011 and also obtained by The Canadian Press, said the anticipated annual average net income—after repayment of the loans with one per cent interest for Enbridge over and above the rate at which the company borrows the funds—would be $70,500 a year.

While the assessment expressed concern that the bands would have to borrow the money to buy into the agreement from the company, an Enbridge spokesman said the offer to borrow the funds was made at the request of aboriginal groups, which might not be able to obtain as low a rate of interest as the pipeline company.

The $70,000 offer would be on the lower end of the scale, for a band located some distance from the pipeline route, said Paul Stanway, company spokesman. The average offer would be in the range of three times that amount, he said.

Enbridge says the benefits go beyond equity, amounting to $400 million in employment, procurement and joint venture opportunities over three years of construction.

But it’s not enough even for some supporters of the project.

“Ten per cent is totally inadequate,” said Brian Lee Crowley, managing director of the Macdonald-Laurier Institute, an Ottawa-based public policy think tank.

“You split that up amongst the dozens of First Nations along the pipeline route and it’s just not enough, in my view, to make the project attractive or to outweigh some of the other objections.”

The Institute published a report last month trying to lay out a path forward for the project that would pump billions of dollars into government coffers.

It recommended a higher portion of equity be split among the bands, in addition to a general corridor benefit agreement and individual agreements that would include supply and service deals.

The institute suggested, among other things, that the federal government designate the pipeline corridor land as reserves, giving First Nations the ability to raise tax revenues and fees from allowing the right-of-way.

It also recommended the Alberta and federal governments provide fully repayable loans to First Nations to buy into the equity arrangement.

Final hearings on the project are expected to wrap up Monday.

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