Jack Danylchuk
Northern News Services

Yellowknife (Nov 28/05) - Reducing royalty rates for the Mackenzie Gas Project is "not giving away the farm," Premier Joe Handley said last week.

Imperial Oil and its partners are asking for $1.2 billion in concessions on the $7 billion project, and Deputy Prime Minister Anne McLellan said the federal government would consider lower royalty rates on gas from the three fields that will anchor the project.

The offer was criticized by the Canadian Taxpayers Federation and Dennis Bevington, NDP candidate for the Western Arctic.

"By refusing to establish royalty rates for this project like those in place in every western province, rates that would rise as the price of gas goes up, the Liberals are using the resources of Northerners to subsidize the already healthy bottom line of big oil," Bevington said.

Federation spokesperson Tanis Fliss called the offer to Imperial "corporate welfare."

Noting Imperial's third quarter profits of $650 million, Fliss said "we need to negotiate what's best for Canada, and handing out subsidies to corporations is not the way."

Handley defended the federal government's move as necessary to encourage development.

"But we have no specific plan to reduce royalties," Handley said. "They will pay the rate that's going now. We're not giving away the farm. We're going to have a royalty regime that is competitive with the rest of Canada."

Handley said that the Northwest Territories corporate tax rate of 14 per cent is ahead of Alberta's 10.5 per cent and "royalties average out to 12.5 per cent. Alberta is in that same range."

"We're competitive and will remain competitive," Handley said.

"People who are not economists are trying to crunch the numbers and are coming up with all kinds of answers. Others are deliberately skewing the numbers to generate some opposition to the pipeline."

Handley said that any royalty reduction would apply to gas from three anchor fields, not on any subsequent discoveries.

"Anything that comes in the future, we can't give guarantees on that," he said.