New Agreement Reached to Secure Newfoundland and Labrador's Share of Offshore Revenues

ST. JOHN'S, April 1, 2019 /CNW/ - New resource-sharing agreement announced.

The Government of Canada is committed to making investments and coming to agreements that help to create and protect good, well-paying middle class jobs, that develop natural resources in the right way, that set the stage for sustained economic growth for years to come.

As we celebrate 70 years of Newfoundland and Labrador's confederation with Canada, today the Honourable Seamus O'Regan, Minister of Indigenous Services, on behalf of the Honourable Dominic LeBlanc, Minister of Intergovernmental Affairs, announced that the Government of Canada and the Government of Newfoundland and Labrador have concluded their review of the 2005 Arrangement on Offshore Revenues, and reached a new resource-sharing agreement: the Hibernia Dividend Backed Annuity Agreement.

The Agreement provides that Canada will transfer to Newfoundland and Labrador a Hibernia Dividend. Over the life of the Agreement, which will conclude in 2056, the province will receive secure, long-term, predictable payments with a net value of $2.5 billion

As part of negotiating the Agreement, the issue of future electricity rates in the province was also considered. The Government of Canada has provided two rounds of significant financial support to the Lower Churchill projects, which have lowered the costs of those projects. However, the interim report of the Newfoundland and Labrador Board of Commissioners of Public Utilities on Rate Mitigation Options and Impacts has stated the expected rate impacts required for debt repayment on the project are extraordinary. 

In light of the foregoing, Canada is prepared to further engage with Newfoundland and Labrador to expeditiously examine the financial structure of the Lower Churchill projects, so that the province can achieve rate mitigation. To that end, the Minister of Finance will travel to Newfoundland and Labrador to meet with the Premier on April 5, 2019 to advance this work. Any further involvement by the federal government would be in the context of a strong and united Canada.

Canada and Newfoundland and Labrador also agreed to work together to plan the use of the offshore area to develop petroleum resources and protect marine biodiversity.  This includes an agreement to restrict petroleum development in the proposed Laurentian Channel Marine Protected Area and to permit petroleum development in the Northeast Slope.

Both Governments agree that a thriving offshore industry is of benefit to everyone and agree to continue to work together to strengthen collaboration and joint management of the offshore.

Quotes

"This is an important day for the people of Newfoundland and Labrador. $2.5 billion dollars of guaranteed revenue on a predictable schedule will provide the certainty and clarity we need. It's excellent progress, but we also need to confront rate mitigation. So, on Friday, the federal Minister of Finance will be here for the next phase of discussions on rate mitigation for the Province. Your seven Members of Parliament for Newfoundland and Labrador know that there's more that can be done to support the people of this province, and we intend to deliver."
‑ Seamus O'Regan, Minister of Indigenous Affairs

"It is fitting that the 70^th Anniversary of our Confederation with Canada coincides with the signing of this agreement, which supports a better, more secure future for generations of Newfoundlanders and Labradorians. Our union with Canada was based on the promise of partnership – a partnership that achieves a higher standard of living for the people both our governments serve. Today, we delivered on that promise."
- The Honourable Dwight Ball, Premier of Newfoundland and Labrador

Related Documents

• Backgrounder: Hibernia Dividend Backed Annuity Agreement
• Backgrounder: Canada's Atlantic Offshore Arrangements with Newfoundland and Labrador

Stay Connected

Twitter: https://twitter.com/Min_Intergov 

Instagram: https://www.instagram.com/intergovernmental_affairs/

SOURCE Minister of Intergovernmental and Northern Affairs and Internal Trade