A testy committee meeting in the House of Assembly reached its boiling point late in the afternoon Thursday, when chairman Jim Bennett had enough.
“To me, this feel like a big scam — the whole thing — nine or 10 or 12 million dollars,” Bennett said. “We have a lot more information than we had this morning, but no more facts.”
Members of the Public Accounts Committee spent the day grilling government officials from the Department of Natural Resources about the forest industry diversification program. The hearing centred around $9 million for the wood pellet plant in Roddickton, which has never commercially produced pellets.
Officials from Natural Resources explained the diversification program was brought in at a time when the global recession was shaking the foundations of the Newfoundland forestry industry, and pellets looked like a good option.
The plan was to sell some wood pellets domestically, as well as ship them to the rest of Atlantic Canada and also to Europe.
Mistakes were made, though.
Locally, it was harder to get Newfoundland wood pellets into big chain stores like WalMart and Kent – “We were a bit naive,” one of the Natural Resources officials said.
Also, officials were sloppy in how the government funding was administered; the company building the pellet plant was given around $1 million more than it should have received, because provincial officials didn’t factor in the federal HST rebate.
As for the European angle, a few years after the money was paid out, the economics just didn’t seem to work.
“Things have changed significantly; the Euro has changed from $1.80 down to about $1.29 now. The shipping cost to Europe has dramatically increased in the past three or four years,” said Eric Young, director of engineering and industry services in the province’s forestry division. “The price of fuel for those large ships has gone up significantly.”
Also, Roddickton doesn’t have a wharf for that kind of freight traffic, and building one would cost millions of dollars.
Liberal interim leader Eddie Joyce said that the whole thing needs to be laid at the feet of Premier Kathy Dunderdale, who was minister of Natural Resources when the whole thing went down.
“There’s five people working in the plant when there’s supposed to be over 300. My concern with it is the lack of due diligence done by the minister at the time – who happens to be the premier today,” Joyce said.
He said it’s more than a little troubling that Dunderdale is steering the ship on the multibillion-dollar Muskrat Falls project after the mistakes and confusion that surrounded the Roddickton pellet plant.
New Democrat MHA Christopher Mitchelmore also saw Muskrat Falls lurking in the background of the pellet controversy.
Back in 2008 and 2009, Mitchelmore said, the government was gung-ho about converting public buildings and people’s homes to wood pellet heat. It was seen as a cheaper, cleaner alternative to oil heat, and there was a government rebate.
Then, Mitchelmore said, sometime right around when the government announced the Muskrat Falls deal, the wind went out of the sails for wood pellets.
“This had significant promise to meet local domestic energy needs, but then something significantly changed in 2010,” he said.
Natural Resources Minister Derrick Dalley wasn’t available for an interview Thursday afternoon, but a spokeswoman for the department issued a statement on his behalf.
“The project was developed to support economic development in a rural part of the province, and had appropriate ministerial oversight,” the statement said.
“However, the economics of the pellet plant project changed significantly after the project was approved which caused challenges. The Department of Natural Resources continues to work with the proponent to resolve their issues and get the facility up and running.”