Stephan Burnett
Northern News Services

Iqaluit (May 24/04) - The Nunavut Power Corporation was slammed last week over the handling of its finances

The Auditor General, Sheila Fraser, states in her report tabled in Iqaluit on May 17 that senior management and the board of directors for Nunavut Power Corp. (NPC) did not meet the challenge of managing the financial affairs of the corporation well during its first three years.

"Large overspending of capital and operating budgets raise a number of concerns, including how budgets were determined, how payments were authorized and how spending was monitored by management and by the board of directors," Fraser said in the report.

Hazen Hawker, chief operating officer for Nunavut Power Corporation (NPC), said the territorial electricity provider is operating at a loss.

The corporate debt when Nunavut Power Corporation divided from Northwest Territories Power Corporation was initially $61 million. This long-term debt will be paid off over 20 years and was incurred through capital expenditures, he said.

"Long-term assets are financed through long-term debt," Hawker explained.

In addition, over the first three years of operation NPC acquired $16 million in short-term debt, which will be converted to long-term debt, he said.

Another $14 million in debt has been incurred because of rising fuel prices, Hawker said. The government of Nunavut assumed $4 million of this debt and another $10 million will be covered through a fuel rider amounting to 7.5 cents per kilowatt hour, he said.

"The effect to the customer will be zero because the Government of Nunavut is going to provide a direct subsidy to the customer on that amount," said David Simailak, Nunavut's minister of energy, economic development and transportation.

Simailak said once the fuel rider has accumulated to $10 million it will be taken off.

Still, the Auditor General said the corporation is financially unhealthy and needs major effort to put it back on a solid foundation.

"By March 31, 2003, the Corporation had borrowed $19 million more than it was legally allowed to," said Fraser.

Simailak said the government is "taking steps to address the issue."