November 16, 2011
Gov't defends Candu
sale
by Terry Myers
Selling off the Candu business side of Atomic Energy of Canada Ltd was
the “responsible” thing to do, even if it does end up costing taxpayers
more than $270 million.
Conservative MP David Anderson, parliamentary secretary to the Minister
of Natural Resources, responded to criticism of the sale in the House
of Commons recently, after the government announced almost $285 million
in funding for “expenditures associated with the divestiture” of the
Candu Reactor division of AECL.
The government announced the sale to Candu Energy Inc., a new company
owned by engineering giant SNC Lavalin Group, at the end of June.
The deal closed October 2.
Under the terms of the agreement, Candu Energy took over AECL Candu's
three “business lines” - services to the existing fleet of Candu
reactors, life-extension projects, and reactor new build projects.
SNC Lavalin paid $15 million for the business, while the federal
government agreed to underwrite any existing life extension projects,
such as those at Point Lepreau and the Bruce nuclear station, and to
contribute up to $75 million towards the completion of the design for
the Enhanced Candu (EC6) reactor.
The federal government will retain ownership of the “intellectual
property” in Candu reactor technology and receive royalties under an
exclusive licence to the new Candu Energy.
The government said at the time of the announcement that, based on
“assumptions and analysis validated by external financial advisors,”
from these royalties as well as from the sale of its inventory of heavy
water, the government could realize a “net present value” in amount of
about $285 million.
“The transaction is part of a necessary restructuring amid challenging
domestic and international developments and is consistent with the
overall government approach to fiscal responsibility.
“It is a critical step to strengthen Canada's nuclear industry while
reducing taxpayers' exposure to nuclear commercial risks,” the
government announcement said.
However, any “value” in the sale appears to have gone up in a puff of
smoke following the release of the government's fall supplementary
spending estimates.
The estimates show that the government has put aside $284,856,000 in
direct funding for the costs of the “divestiture.”
The estimates also include another $75 million for the costs of
“workforce transition” and $200.5 million to AECL to meet “operational
requirements and ongoing programs.”
However, while those costs include things like health and safety
upgrades and “legacy costs” associated with the wind-down of the Maple
reactor project, they also include investment in “new build reactor
technology development” and “refurbishment project shortfalls and
restructuring costs,” both issues involved in the sale of the Candu
business.
All together, the supplementary estimates bring federal funding for
AECL to just under $807 million this year.
Still, it was well worth it, said Anderson.
Quebec New Democrat MP Francois Lapointe said “massive overspending” on
AECL is “par for the course for the government.”
“But what is different this time is that it has already sold most of
the business to a private company.
“Why is the minister hanging taxpayers out to dry while subsidizing
privatized nuclear power?” she said.
Anderson said the government sold the Candu business to a “strong
private sector partner” for “precisely that reason.”
“We agree that AECL is costing taxpayers too much money and that is why
we moved ahead.”
Anderson said that if the NDP had its way, there would be no nuclear
industry in Canada, a loss of 30,000 jobs.
“We are moving ahead, protecting taxpayers and protecting industry at
the same time.”
Anderson said the costs of the “transition” have actually been “lower
than they were initially estimated to be.”
“We have saved hundreds of Canadian jobs through doing that.”
“Our government is taking a responsible approach. We are protecting
taxpayers' interests while ensuring the future of the nuclear industry
in Canada,” he said.
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