Darrell Greer
Northern News Services

Rankin Inlet (Sep 11/02) - Negotiations for a construction contract for the Rankin Inlet Regional Health Centre have reached the boiling point.

Nunavut Finance Minister Kelvin Ng said last week he has lost patience with the length of time the negotiations have taken and is prepared to pursue a different avenue if a deal isn't struck quickly.

- Cost of health centre $15,924,382 (GST inclusive) and likely to rise - Government to hold land lease if deal signed - Financing costs $892,416 - Questions surround Sakku management fees of $180,000 - Hamlet still not paid - Minister wants deal done - $220,000 claim taken off the table

"I'm seriously concerned about the capacity and the willingness of Sakku (Investments Corp.) to meet the needs of the government of Nunavut when it comes to this project," said Ng told Kivalliq News.

"The next week to 10 days will tell the tale whether we can proceed with them (Sakku) or be forced to look at other options, including the GN taking a more active, hands-on role in developing the project. We have to have some certainty by that time," he said.

"Sakku has been problematic right from the start of this process, for whatever reasons, and our patience is growing thin."

Ng said the issues for the government continue to be the overall cost of the project and the schedule of construction.

He said Sakku has every right to expect a reasonable return as project developer, but the costs have to be reasonable for the Nunavut government, as well.

Ng said he is growing increasingly concerned with the time lines surrounding the project and the government still wants to see major construction take place next year.

"The time line is critical in that should the GN make the decision to become more active or terminate the agreement with Sakku, there's enough time for us to proceed with design and ensure things are still a go for next year, Ng said.

"I've been a leading advocate in cabinet since the GNWT on having the regional birthright development companies handle these projects. But it's time for this deal to get done within the parameters the government has set out ($15 million), of which Sakku was fully aware.

"We've had nowhere near these problems with the other two projects (Kitikmeot and Baffin)".

Five different proposals

Sakku president Paul Landry expressed surprise over the minister's ultimatum.

He said problems with the length of negotiations on the $15-million project stem from the Nunavut government's continual shifts in focus.

"The GN has given us five different proposals since this past September," said Landry.

"I'm still cautiously optimistic we'll bring closure to the negotiations within the next 10 days."

Landry said an earlier $220,000 cost overrun claim by Sakku has been taken off the table in negotiations.

But, he added, the territorial government has to appreciate the obstacles Sakku faces in meeting the challenge of a four-year-old project.

He said the Rankin project is financially outdated, with a price tag set in 1998.

"You can't build the same facility in 2002 to 2004 with 1998 dollars, so, yes, there's likely to be some cost overruns. However, we've reached the point where we can't move any more, Landry said. "If there's cost overruns on, basically, antiquated numbers, then we certainly would look to the GN to keep our margins."

Landry said if anyone should be mad over the length of time negotiations have taken, it should be the hamlet of Rankin Inlet.

"We put our money (land acquisition) into a lawyer's trust fund, where it's been sitting since this past December. The hamlet still hasn't received its money and all this foot dragging is making me feel like a real schmuck," he said.

Agree to disagree

Ng said a final cost on the project has to come in at a level that reflects sound fiscal responsibility on behalf of the Nunavut government.

He said that accountability stretches from Nunavut all the way to the nation's capital -- alluding to the previous auditor general's report, which slammed the territorial government for entering into too many long-term lease arrangements and other high development costs.

"Sakku's management fees have not been finalized as yet, but they are up from the original estimates," Ng said.

"As I understand it, that topic is still being negotiated."

Landry said the original $180,000 allocated to administer and manage the project has not moved.

However, if he could start the negotiating process over again, he'd want more.

"When we set out to do this project, we choose to go into a number of small-size contracts in order to stimulate the Kivalliq regional economy by using local plumbers, drywallers and so forth.

"We want to increase local and Inuit content on the job and that's the price we have to pay for doing it."