Rankin Inlet (Mar 10/03) - Gas prices for the coming sealift in Nunavut won't change from last year.

Fuel prices were last set by the Government of Nunavut's petroleum products division in November, 2001.

The rate sheet for 27 GN-supplied communities in Nunavut won't be reviewed until this November at the earliest, said the PPG's Roy Green in Rankin Inlet.

The summer sealift runs from June or July through to October.

The government this year will buy about 130 million litres of fuel for the 27 communities and for re-sale to private sector suppliers servicing Iqaluit.

The PPG typically buys fuel once a year, in December, with the purchase price based on the prevailing market or `rack' price when the sealift starts.

The rack price will be considerably higher than in the summer of 2002 as crude oil prices continue to soar on international markets.

Green said the added cost to the GN this year will be offset by savings with the territory's new fuel supply and delivery contracts.

Imperial Oil and Shell Canada will start three-year fuel supply contracts this year.

The contracts include gas, diesel, heating oil, and aviation fuel.

Woodward Oil is handling the sealift to the Baffin and Kivalliq, and NTCL to the Kitikmeot.

The supply and delivery contracts are estimated to be worth $100 million-plus over the three years.

The GN has said it will save about $16 million with the new deals.

"The savings we are realizing on the transportation side, and the discounts we have contracted with suppliers on the rack price will certainly help minimize the impact of higher market prices this summer," said Green.

The GN is currently revamping its approach to energy delivery in the territory.

The newly created Nunavut Fuel Corporation will take over fuel purchase, transportation, storage, delivery and resale from the PPG.

The corporation will be a subsidiary of Qulliq Energy Corporation, to be created by enabling legislation shortly.

Green said the new supply contracts with Shell and Esso will enable Nunavut Fuel Corp. to use a different strategy when buying.

"For the first time, we now have the option of fixing the price at any time we choose within a given year," he said.

"In the past the contract price was always based on whatever the rack price was in the summer."

The PPG is currently developing a new fuel purchase policy and strategy for review and approval by the GN.

"With that authority, Nunavut Fuel Corporation could use fix-pricing as a hedge against the market price fluctuations we are seeing now, said Green."

With a 130 million litre purchase, a one cent increase in price costs the GN more than a million dollars.

Green said the goal isn't to try to beat the market, however.

"That would be too risky. The idea is that if we saw a price that was within a target range, we would have the option of buying at that price in order to stabilize the cost to consumers in Nunavut. Right now, we can't."

Prices in Nunavut

Meanwhile, pump prices in Nunavut are starting to look pretty good against the rest of Canada.

"Usually we are at a disadvantage price-wise compared to the South," said the GN's Nino Wischnewski in Iqaluit.

"Right now, gas here is 89 cents a litre, which is lower than in some places in the Maritimes."

The gas came in via the 2002 sealift, before market prices starting going up.

Outside Iqaluit, gas and heating oil prices are lowest in Baffin and highest in the Kitikmeot.

Gas prices average $0.91 per litre in seven Kitikmeot communities, and $0.84 in 12 Baffin communities.

Heating oil averages $0.74 per litre in Baffin and $0.84 in Kitikmeot.

In seven Keewatin communities, heating oil averages $0.78 per litre, and regular gas averages $0.89.