GOOD MONEY AFTER BAD 

Alberta Petrochemical Incentive Program to offer 12 per cent grants to attract new investment

AUSTERITY FOR ALBERTANS CORPORATE WELFARE FOR BIG OIL 

The Alberta government is offering to pay up to 12 per cent of petrochemical project capital costs in an attempt to woo more investment to the province.

© Chris Schwartz/Government of Alberta Associate Minister of Natural Gas and Electricity Dale Nally announcing the Alberta Petrochemical Incentive Program July 9, 2020.

The grants, part of the Alberta Petrochemical Incentive Program first announced in July, were announced Friday by Associate Minister of Natural Gas and Electricity Dale Nally. Companies can now begin the application process.

New petrochemical, fertilizer, or hydrogen-producing facilities can receive the grants once they are up and running, as can expansions to existing facilities.

In an interview Thursday, Nally said the industry has been asking for the program.

“I can tell you they are (champing) at the bit to get their hands on the details,” he said.

To be eligible, manufacturing and processing facility projects must create new and permanent jobs, have a minimum of $50 million in capital investment, and consume natural gas, natural gas liquids or petrochemicals.

There is no cap to the program, but Premier Jason Kenney has estimated the cost could come in around $1 billion in total.

The program is part of a larger Natural Gas Vision and Strategy first outlined three weeks ago , and will run alongside the existing $1.1 billion petrochemical diversification royalty credit program introduced by the former NDP government in 2016.

Applications are closed for the diversification program, but companies that are taking part will have six months to apply for the new APIP program and abandon the royalty credit program.

The UCP government discontinued two other related programs in 2019 — the Petrochemical Feedstock Infrastructure Program and the Partial Upgrading Program, saying they carried a higher financial risk to the province.

Nally said the grants would be paid out over a three year period, so if a facility stops operating after six months, it would only receive a third of its grant.

“Some of these facilities require 5,000 to 7,000 construction jobs during the construction phase, so the tax revenue alone that would have been generated just on the construction of the facility would more than pay for the grants, so in that sense there is security,” said Nally.

NDP Opposition energy critic Kathleen Ganley said she was pleased the UCP government was recognizing diversification was not a luxury anymore, but she expressed concern about the security of Albertans’ investments.

“If you’re taking the risk you should get the profit. With the grant program it looks like the company still has the same opportunity for the profit, but more of the risk has been shifted to the taxpayer,” said Ganley.

The Canadian Taxpayers Federation slammed the Alberta government for failing to put a cap on costs, calling it corporate welfare. CTF IS KENNEY'S FORMER EMPLOYER 

The application window for small projects, with capital costs valued between $50 and $150 million, will be open for five years, while applications for larger projects will be open for 10 years.

Mark Plamondon, executive director of Alberta’s Industrial Heartland Association, said in a Friday news release the program makes Alberta more attractive to investors as the Industrial Heartland region northeast of Edmonton aims to attract $30 billion by 2030.

Janet Riopel, president and CEO of the Edmonton Chamber of Commerce, said the program was great news and would also boost the city’s economy.

On Friday, the Globe and Mail reported that the Alberta government is in talks with a private Saudi Arabian company to build a $5-billion petrochemical facility in the province.

Jennifer Henshaw, press secretary to Nally, said in a statement they hoped to have more to say in the months to come but would not comment due to confidentiality and commercial sensitivities.

“We are pleased to see that interest has been expressed by a number of global companies from different regions,” said Henshaw.

Kenney has been critical of Saudi Arabia for flooding North American oil markets at the expense of Alberta and its export of “democratic” Canadian energy, calling the Middle Eastern country one of the world’s “worst regimes.”

lijohnson@postmedia.com

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