Infrastructure Development in Remote Canada: A Discussion of First Nations-Led Projects and Progressive Financing Options

Transcription

1 Infrastructure Development in Remote Canada: A Discussion of First Nations-Led Projects and Progressive Financing Options Cando's 25th Annual National Conference & AGM OCTOBER 22 25, 2018

2 Agenda Current Infrastructure Challenges Infrastructure Project Priorities Wataynikaneyap Power Transmission Line Kitimat LPG Export Facility Key Takeaways - Infrastructure Development Topics for discussion 2

3 Current infrastructure challenges (1/2) Human dimension 15 years shorter 44% vs 88% 38% vs 7% $30bn 67 water advisories Shorter life expectancy Life expectancy up to 15 years shorter for Indigenous peoples Gaps in graduation rates 44% of First Nations on-reserve have completed high school, compared to 88% for non-indigenous peoples High rates of child poverty 7% of children in Canada live in poverty, but for Indigenous children it's 38% Infrastructure deficit First Nations infrastructure deficit estimated as high as $30bn (i.e. housing, water, health facilities, roads, etc) Drinking water advisories As of October 19, 2018, 67 long-term drinking water advisories in effect on public systems on reserve 3

4 Current infrastructure challenges (2/2) Financial and economic dimensions Indigenous people in Canada face barriers to accessing capital that other Canadians do not face A legal and regulatory environment that is unfavorable for economic development Barriers to control over lands and resources Underinvestment in infrastructure Low rates of financial literacy Higher costs of doing business Lack of support for business growth; and A complex government funding regime. 4

5 Indigenous involvement in Canadian infrastructure projects is increasing The evolution of Indigenous involvement in Canadian infrastructure Government consultation and accommodation Employment and economic development Royalties, land leases Full ownership of small projects, equity participations in larger projects as part of a settlement Increased participation in large projects, majority ownership, development Source: Moody s Investors Service 5

6 Infrastructure Project Priorities Our View First Nations Majority Ownership Sustainable Employment Natural Resource Safeguarding and Stewardship Legacy for Future Generations 6

7 Wataynikaneyap Power Transmission Line (1/3) Canada s Largest First Nations Led Infrastructure Project Wataynikaneyap Power is a First Nations led licensed transmission company, regulated by the Ontario Energy Board. It is owned by 22 First Nation communities (51%) in partnership with Fortis Inc (49%). The project company will own, develop, build, operate, maintain and finance approximately 1,800 kilometers of new transmission (est. $1.35 Bn in $2015) in northwestern Ontario to connect 17 remote First Nations communities to the electrical grid and replace existing diesel generation in these communities. Source: 7

8 Wataynikaneyap Power Transmission Line (2/3) Benefits of the project Lower cost of service: est. $1 billion of savings in NPV terms over continued diesel generation One-time economic impacts from construction Ongoing economic impacts from increased economic growth Increased energy availability and quality Decreased emissions Improved health outcomes Avoided diesel spills Natural resources development Source: 8

9 Wataynikaneyap Power Transmission Line (3/3) Inclusive ownership structure Source: The 22 First Nations communities have the ability to increase their ownership to 100% over time. In 2018, the Governments of Canada and Ontario announced $1.6 billion of funding for the Project. The funding framework allows for a viable transmission business with First Nations and Fortis Inc. participating as the equity investors. 9

10 Kitimat LPG Export Facility (1/2) Project will be built, in part, on Haisla land Pacific Traverse Energy Ltd. (PTE) intends to export propane (by specialty rail car) recovered from natural gas processing and crude oil refining in Western Canada (the Project ) The $465M Project includes the construction and operation of a new purpose built propane export facility on a site leased from the Haisla First Nation, near Kitimat in BC. PTE is negotiating agreements with the Haisla to define the land use and the relationship the Haisla will have with the Project Source: PTE 10

11 Kitimat LPG Export Facility (2/2) What factors underpin infrastructure development? our interest in building a future for our people. We know exactly what we need the ability to govern ourselves, take care of our families, and ensure our young people have the kind of opportunities that allow them to remain in our community and become self supporting. What we need is well paying jobs and economic development opportunities, so we can dramatically reduce unemployment. [LNG/LPG] development has offered that path for the Haisla Nation. Crystal Smith, Chief Councillor Haisla Nation Council Source: BC Treaty Commission, Statement of Intent Traditional Territory Boundary Haisla Nation 11

12 Key Takeaways - Infrastructure Development (1/3) Large-scale industrial developments offer significant employment, investment and infrastructure improvement opportunities. Plan, prioritise and prepare projects before you leap. Access to long-term infrastructure capital support will help to empower Indigenous peoples to control the delivery of infrastructure and related services. First Nations have options available for favorable borrowing terms, enabling increased degrees of ownership. These complex projects apply considerable demands on the public service institutions, and face human resources challenges in terms of capacity. Crowd-in external specialized expertise designed to transfer knowledge and to ensure long-term sustainability and stewardship of projects. 12

13 Key Takeaways - Infrastructure Development (2/3) Economic / land use / infrastructure plan(s) allows Indigenous communities to pursue economic development on their own terms by identifying and setting long-term priorities for infrastructure development - enable Indigenous nations as planners and decision-makers, instead of simply as funding and program recipients. Enhance the relevance, quality and availability of information to Indigenous households, businesses and communities greater transparency and Indigenous-led research & data governance. Work with Indigenous peoples, nations and governments to expand investments in communities and to enhance the investment climate more predictable and simplified funding streams to counter the patchwork nature of government funding. 13

14 Key Takeaways - Infrastructure Development (3/3) Indigenous government institutions should be able to use their revenue streams to increase their ability to access financing - leverage non-market sources of capital (such as government contributions) to attract market capital. Address current legal & regulatory barriers to accessing capital, explore and support affordable & alternative lending options - expand investments in and support for First Nation Financial Institutions and enable more First Nations to secure long-term, low-interest loans through the First Nations Finance Authority. Develop an Indigenous-specific private investment model scaling smaller contracts that can attract local private partners. 14

15 Topics for discussion Are there enough tools, resources and capacity to plan, prioritise, prepare, and fund well-prepared, bankable infrastructure projects? Are the infrastructure and services fit for purpose in terms of the needs met, costs and sustainability? Role of economic development corporations and their potential to participate as equity partners in infrastructure development? How to leverage private use infrastructure for public use (e.g. mining-related infrastructure)? Is there merit for a central repository of past, current and pipeline projects to curate success models, act as a centre of excellence for implementing projects, and provide line of sight to the market on a predictable project flow? 15

16 Thank you Elan Cusiac-Barr Director 1250 Rene Levesque Boulevard West Suite 2500 Montreal, QC H3B 4Y1 : : elan.cusiac-barr@pwc.com This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved. refers to the Canadian firm, and may sometimes refer to the network. Each member firm is a separate legal entity. Please see for further details.