Just How Bad Is BC's LNG Deal with Petronas?

Just How Bad Is BC's LNG Deal with Petronas?

Postby Oscar » Tue Jul 14, 2015 11:04 am

Just How Bad Is BC's LNG Deal with Petronas?

[ http://thetyee.ca/Opinion/2015/07/14/BC ... ign=140715 ]

This is a massive privatization of a public resource. And for what? Let's tally it up.

By Marc Lee, July 14, 2015, TheTyee.ca


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Adding these together, B.C. would get about $6.5 billion in additional revenues over 25 years, or just over $200 million per year. Compare that to a provincial budget of $46 billion per year, and total provincial debt of $43 billion. There are also costs to the public sector associated with infrastructure, services and so forth, so we should really be looking at net revenues.

Revenues would go up if Petronas builds phase two, and its export capacity increases to 18 million tonnes per year. And prices in Asia could venture higher, thereby increasing corporate profits and B.C.'s share. On the other hand, I do not account for "transfer pricing," whereby companies shift costs in order to minimize their global taxes payable.

What about jobs? The Petronas environmental assessment application estimates a peak of 3,500 temporary jobs during the three-year construction phase of the project. After that, only 200 to 300 permanent jobs. There would likely be some additional employment upstream due to increased fracking as well, but in total the job creation is very small given the size of the venture. And that's assuming all of these full time jobs hire people who would otherwise be unemployed; if they just shift from another part of the economy the benefits are much less. In comparison, B.C. has 2.4 million employed people.

For all of the hype about LNG creating jobs and eliminating our provincial debt, these real-world numbers are underwhelming to say the least. Having campaigned on that hype in the provincial election two years ago, it appears our provincial government is willing to accept a bad deal over no deal.

Read more: Energy, BC Politics, Environment,

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Marc Lee is a Senior Economist in the B.C. Office of the Canadian Centre for Policy Alternatives.
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