May 9, 1994                                                              RESOURCE ESTIMATES COMMITTEE


Pursuant to Standing Order 87, Ms. Lynn Verge, M.H.A. (Humber East) substitutes for Rick Woodford, M.H.A. (Humber Valley).

The Committee met at 9:00 a.m. in the House of Assembly.

MR. CHAIRMAN (Penney): Order, please!

Welcome to the continuation of the meeting to study the estimates of the Department of Mines and Energy. I welcome the minister the hon. Rex Gibbons and his officials.

I will introduce the members of the Committee; my name is Melvin Penney, I am the Member for Lewisporte and the Chairman of the Committee. To my left is Ms. Lynn Verge, the Member for Humber East who will be the vice-chairman for today. She is sitting in for and replacing Mr. Rick Woodford, the Member for Humber Valley. Further to my left is Mr. Paul Shelley, the Member for Baie Verte -White Bay and Dr. Bud Hulan, the Member for St. George's. Other members of the committee should be arriving shortly.

Since we have gone through the procedures that normally occupy the first forty-five minutes or so of proceedings we need not waste any more time going back and redoing that. Mr. Whelan has just walked in, Mr. Don Whelan the Member for Harbour Main.

I will now go to where we left off on April 27. At 12 noon we were in the process of questioning the minister and each member is given ten minutes, so I will turn the questioning over to Ms. Verge.

MS. VERGE: Thank you. I would like to resume my questioning about Hydro, one of the responsibilities of the Minister of Mines and Energy. Two years ago this Province had an opportunity to make a deal with Hydro Quebec for redress on the Upper Churchill and development of the Lower Churchill. I would like to ask the minister to comment on the amount of revenue that would be flowing to the government in this fiscal year had that agreement been entered into. I am referring particularly to the provision in the offer from Hydro Quebec of payment of additional royalties and revenues on the Upper Churchill, payments which would have started by now.

DR. GIBBONS: Mr. Chair and Madam Vice-Chair, we did not reach an agreement with Hydro Quebec on the development of the Lower Churchill. We reached an intermediate stage and we did not reach an agreement. So I cannot speak about revenues that might or might not have started flowing by now relative to that. We did not reach an agreement on the Lower Churchill. The Lower Churchill development would have taken several years to conclude and I know there would have been a lot of components in the contract but I do not see any point in speculating about what might or might not be in something that we did not reach an agreement on. We did not reach it, there is no agreement and there is no development.

MS. VERGE: Well sadly the government did not reach an agreement but the point is, the government could have, two years of work went into negotiations. Isn't it a fact that the minister and people working on the negotiations in analyzing Hydro Quebec's offer did a breakdown year by year of the impact on the Province's economy as a whole and in particular on the cash flow to the provincial government?

DR. GIBBONS: Well certainly I am not able to talk about any details like that. I just do not know the details of what might or might not have been in a possible agreement that was not reached. We did not reach an agreement and we concluded the negotiations because of what is happening with the economy of areas that would be using the power that would be developed from the Lower Churchill and the negotiations are still in a waiting mode. So until we reach an agreement there is no point at all in speculating about what might have been. Certainly we would not reach an agreement unless we could get an agreement that would be in the best interest of the people of Newfoundland and Labrador.

Government gets lots of criticism, about the former agreement that was signed on the Upper Churchill, because an agreement was signed that did have basically one item missing, did not have the escalator clause, and we are not going to sign any agreement today until we have reached a final agreement on all outstanding items, and there is not going to be any agreement anyway unless there is a need for the power. That is the number one priority. There has to be a need for the power; otherwise it doesn't get developed and there is no agreement. That is the essence of what happened. There is no need for the power - the need for the power has been deferred for several years - so we did not conclude an agreement. We have sort of set it aside, and that is the way it will sit until there is a reason to restart negotiations. Then I would think that we would be able to reach an agreement, if we could continue to negotiate in good faith on all the issues that are outstanding, but we had not reached a final agreement.

MS. VERGE: You didn't negotiate in good faith, though, did you?

DR. GIBBONS: We sure did negotiate in good faith.

MS. VERGE: You might have, but the Premier didn't, and he was the one who dictated the outcome.

In the course of the two years of negotiations, you and your people did an analysis of Hydro-Quebec's offer, the last offer in late 1991, and while you may not recall the figures, while you might not have the details in your head, surely you can provide the committee with copies of those documents?

DR. GIBBONS: No, Madam Verge, I cannot provide the committee with copies of the documents. We had not reached any final agreement. We had an agreement with the other side that we would not be making a lot of the details public until we reached an agreement that we could all acknowledge would be put forward for full public debate. We were still in the midst of negotiations, and I don't remember the details right now of what was included in some of these negotiations.

MS. VERGE: But it is all in the records at Hydro, isn't it?

DR. GIBBONS: Oh, I would think that it is all in the records, sure.

MS. VERGE: And you are withholding those details from the people of the Province, yet you are embarking on selling Hydro with the result that somebody in the private sector who will end up controlling Hydro will inherit all of those documents and records.

DR. GIBBONS: No, far from it. Anything dealing with the Churchill is not part of this deal. Any of the documents associated with Churchill negotiations are not part of the deal. All of that information will remain with government. We will be holding all of that information. The proposed new Hydro would not be holding that information, would not be keeping it. It would remain with us.

MS. VERGE: How can you say that, because the senior executives and professionals at Hydro, according to what the government has said about the intention of privatizing Hydro, will continue to be employed by the new privatized corporation, and they are the ones with the expertise. They are the ones who were on the negotiating team and did the analysis.

DR. GIBBONS: There is no question that some of them were on the negotiating team. One of them has retired and is no longer there. Two or three others - two in particular - were on the negotiating team. Others who were on the negotiating team are in government. Three of the members of the negotiating team were over here in government, not at Hydro at all, and there were various people involved in doing analysis.

Sure there are documents, and these documents will remain with government. They will not go with the proposed new Hydro. They would not be with that corporation. They would be with us.

MS. VERGE: But all of those documents are at Hydro now.

DR. GIBBONS: They are stored. I acknowledge they are stored at Hydro right now, but they would not be remaining with Hydro after a privatization. If Hydro is privatized, all of these documents related to the Lower Churchill would come to us.

Right now we have an integration of information storage like that, but we are going to continue to keep our share of the Upper Churchill. If privatization proceeds, we are going to continue to keep our share of the Lower Churchill Development Corporation, and all undeveloped water rights in Labrador remain with us, so everything dealing with Labrador development, Lower Churchill development, that may be in the form of various documents at Hydro, would be coming to government.

MS. VERGE: What you will be losing is your electricity division of government. You will be losing your expertise and your financial strength that you would need to develop the Lower Churchill.

DR. GIBBONS: No.

MS. VERGE: So you can't say that privatizing Hydro won't have an extremely negative affect on this Province's chance to benefit from future Labrador development.

DR. GIBBONS: I don't believe it would have any affect at all on the future development of the Lower Churchill. In terms of people, people can be replaced. People are normally replaced. I don't know how many years we will have to wait. We could have to wait a decade. It may be five years, it may be two years, before we start some further discussions. I don't know the timing.

MS. VERGE: If we go to court again as the Premier is proposing for sure we will have to wait another decade.

DR. GIBBONS: (Inaudible) -

MS. VERGE: Can the minister imagine Hydro Quebec resuming negotiations when Newfoundland is threatening or is embarking on another court action to try to break the Upper Churchill contract?

DR. GIBBONS: I'm not going to speculate on that. The negotiations were discontinued because of the decreasing demand for electricity in the Quebec market and in the market that Quebec has for its surplus power, in the northeast United States. When things change in these areas then we will see what happens. At this time there is nothing ongoing. In due course we will go ahead.

MS. VERGE: How long has it been since negotiations ended? A bit more than two years?

DR. GIBBONS: It is about two years ago.

MS. VERGE: Yes.

DR. GIBBONS: It was in March of 1992, the last meeting, and we said: Let's lay it aside for now, let's see what is going on.

MS. VERGE: So everything has been dead for two years yet the minister is still withholding from the people of this Province the details of Hydro Quebec's offer.

DR. GIBBONS: When the negotiating teams stopped having their active meetings they didn't say everything is off. They said: Let's lay it aside for now, it looks like we have to wait a little longer before we are going to need to get the power. We laid things aside. We still have our agreement in place between the two parties that we are not going to go out laying out all the details of the negotiations until we've reached an appropriate point that it would be right to make it public, and then have a public debate on it.

We've always said -

MS. VERGE: What would be an appropriate point?

DR. GIBBONS: We have always said that we, before we finalize any agreement, would make it public and would have a public debate on it. We've said that dating way back to when the negotiations got started, when we were being asked questions in this Legislature and elsewhere. Right now I'm not about to say: Yes, I'm going to go out and open it all up today of every meeting that we had for the twenty-nine meetings that we had over the three-year period.

MS. VERGE: (Inaudible)?

DR. GIBBONS: I don't think that would be right.

MS. VERGE: What would be an appropriate time which would prompt the minister to disclose to the people of the Province what really did happen?

DR. GIBBONS: I don't know, but the point of the matter is that we did not reach an agreement. We did not reach the stage where we had an agreement that we could consider acceptable for the people of this Province, and it (inaudible) -

MS. VERGE: But you considered it acceptable, and the negotiating team considered it acceptable.

MR. CHAIRMAN: Order, please!

MS. VERGE: It was just the Premier who balked and -

DR. GIBBONS: No ma'am.

MS. VERGE: - directed that the negotiating team take back agreements that had been reached on a number of issues. Isn't that what really happened?

DR. GIBBONS: No ma'am.

MR. CHAIRMAN: Order, please!

The hon. member's time is up. I will turn the questioning over to another member of the Committee. Before I do that, I had overlooked the possibility that maybe there was an official here today who was not at the earlier meeting we had. If that is the case (inaudible) -

DR. GIBBONS: (Inaudible) all the same.

MR. CHAIRMAN: The same officials as you had before?

DR. GIBBONS: (Inaudible).

MR. CHAIRMAN: Very well.

The other thing is, you have a copy of the minutes of the May 2 meeting, the estimates of the Department of Forestry and Agriculture. Could we have a motion to adopt these minutes?

On motion, minutes adopted as circulated.

MR. CHAIRMAN: Dr. Hulan.

DR. HULAN: There is an error in the minutes. I just noticed that it should be Forestry and Agriculture and not Development.

MR. CHAIRMAN: Item No. 2.

DR. HULAN: Indeed it should be Agriculture and Forestry but I will not argue that point right now.

MR. CHAIRMAN: Item No. 2.

Appearing were Hon. Graham Flight, MHA, Minister of Department of Forestry and Development. That should be Department of Forestry and Agriculture, duly noted. Now, then do we have a motion to adopt the minutes as amended?

MR. SHELLEY: So moved.

MR. CHAIRMAN: Seconded.

DR. HULAN: Seconded.

MR. CHAIRMAN: Carried. The minutes are adopted as amended.

If there are any members of the Committee, or members of the minister's delegation, who wish to have a copy brought into the legislative chamber just notify the Page and he will get a copy and bring it in for you, or if you want tea we have the kettle plugged in for you as well.

Dr. Hulan.

DR. HULAN: Thank you, Mr. Chairman.

Good morning, Mr. Minister and your associates.

I want to commend you, Mr. Minister, on the good job you are doing in the department under those very difficult times, with so many issues you have to deal with, and especially with the sale of Newfoundland Hydro. I think you are doing a commendable job. I want to make that comment so that it is recorded here this morning.

I have just a few questions. A one line item question only and that will be very easy to answer, Page 159. What I am looking at is Grants and Subsidies. If you look at 3.1.03, Number 10, the $500,000. I notice that in the revised Budget last year it had $500,000, and again now. What is that $500,000 for may I ask?

DR. GIBBONS: Dr. Hulan, part way through last year the government approved a mineral exploration assistance program to cost share advanced exploration projects in the mineral sector. That would be things like drilling of prospects or other similar advanced projects. We put $500,000 in last year's budget and we have done the same again this year. We found this to be a great stimulus to some exploration in advanced projects. The $500,000 we put in last year probably leveraged about another $1.5 million extra dollars that got spent on drilling projects.

We have the numbers here. Total exploration expenditures related to this last year, ours plus industry, total $l,951,900 which had private sector contributions of $1,527,688. And our own total, out of the $500,000 we spent $424,212. We did not spent it all, so we are continuing a similar project this year. There were twelve drilling projects in all, related to drilling in various parts of the Province, helping advance some projects that had been discovered by particularly the junior mining sector.

DR. HULAN: Some general questions as they pertain to the District of St. George's and the west coast. Would you share with us what is happening on the Port au Port Peninsula as far as offshore drilling on land is concerned?

DR. GIBBONS: The exploration in that area last year was quite active. There were seismic programs concluded last year in the Parsons Pond area, I think it was, last winter, and this past fall and this winter seismic programs were concluded on the Port au Port Peninsula. Also last year - I believe it was last year - an aero-magnetic study was concluded on the Port au Port as well as the offshore areas around the Port au Port Peninsula.

Marathon in particular identified exploration targets that they considered to be worthy of drilling. Marathon identified a target and announced that they plan to drill a well from the Port au Port into the offshore, into one structure. Hunt indicated that they had a target that they would like to drill as well and they said that they had a 70 per cent chance that they would do a well this year on land on the Port au Port Peninsula. We haven't yet got a final decision from Hunt about that well, but I'm still optimistic about both wells and that they will both be done in 1994.

DR. HULAN: What about the - there was also some talk about the possibility behind Fischells - Flat Bay area.

DR. GIBBONS: Yes. There is a licence that was taken for oil exploration in that area by a company called - I believe it was Canadian Roxana, Calgary. They have that licence. To date, to the best of my knowledge, they haven't done any particular work on the ground, in the field, on that. I don't know what their plans are for 1994.

DR. HULAN: Would one speculate that they may be waiting to see what happens in the offshore and the Port au Port area before they start, maybe?

DR. GIBBONS: It's possible that that may be the case, that they see what happens with Hunt and Marathon in adjacent areas. You may see some further action there. The licence is good for five years from the time of issue so they still have some time to spend the dollars that they committed in that particular area.

DR. HULAN: Again, because of the importance of the co-generation project and peat burning to the District of St. George's and employment generation, and the end result being after this project is completed the availability of some fairly large acreage of good peat soil for agricultural and food production purposes, would you very briefly, without going into too many details, tell us - I know you've been quite occupied in meetings and negotiations with the consortium from the U.S. on that proposal, and it has taken up quite a bit of time over the last year or so. What is the status of that right now?

DR. GIBBONS: To date there has been no final decision made on that particular project, but the project has to be put in the context of what is happening in the Province relative to electricity demand. Hydro a couple of years ago initiated a call for proposals for up to fifty megawatts from small hydro generators. Eventually last fall and December they made a decision to short-list four projects that totalled thirty-eight, less than the fifty, and have told those four proponents that they will not get a decision, whether it is a go ahead or not, until they complete their assessment of electricity demand for the future within the next month or so. They said they would give them a decision by June.

We've been going through a period of flat electricity demand, and actually in the last twelve months there was a bit of a decrease in sales by Hydro. You have to put the co-generation project and whether or not that would come on stream in the context of that and see whether or not you could do both or just one or the other. If it is one or the other, which one. But at this time Hydro doesn't know for sure whether it is going to need anything to come on stream before 1998-1999. Even the small hydros have been told they wouldn't need them until the fall of 1998 at the earliest. They will know that later on. The whole question of that project is still up in the air.

DR. HULAN: Misery loves company, and so on. The District of St. George's has a very high chronic employment problem. Our forest industry is decimated and gone. We have probably two more years of wood supply there for the Stephenville mill, and then we will have a lot of loggers and truckers and so on out of jobs. Now thrown into that milieu is the closure of the Flat Bay gypsum quarry.

At this stage are we any further ahead in finding a possible buyer for the quarry, or a better sale, or a more solid sale for the product that comes out of that?

DR. GIBBONS: At this time, no, but in a moment I will ask Paul Dean to speak to this one because he may well be more up to date on this than I am. It appears that the present operator will be moving out of the operation by October of this year, and this year they will only be producing for Corner Brook, for the gyproc wallboard plant in Corner Brook, not for their own plants in the United States.

Some licences are reverting to government. Some licences where mining has been active are being rehabilitated this year, and I understand that there is some interest in the active licence, but I don't know quite what has happened to it in the last few weeks.

We are going to promote the properties that have not been developed. There is a large gypsum deposit in the Fischells area that we are going to be trying to sell around the world, looking at the companies that may be interested in doing some development there. At this time I would not want to raise hopes; it is just that a big deposit needs promotion and we will be promoting it.

Maybe I should ask Paul Dean if there is anything further.

MR. DEAN: Thank you, Minister.

To be fair, I don't think there is a party interested in purchasing the operation and operating it at the present time. The remaining reserves at Flat Bay are not that great. There are probably about 4 million tons or so, or maybe less, at the quarries at Flat Bay, so our future focus, as the minister said, will be on the large on-line deposit at Fischells, and Domtar has surrendered that deposit to the Crown already, so we are doing some preliminary work on Fischells just to see if it is feasible and what the cost might be of bringing that deposit into production. When we have some idea of what that cost is going to look like then, as the minister said, we will market that deposit then.

MR. CHAIRMAN: Order, please! The member's time is up. We will get back to you again, Dr. Hulan.

Now it is the intention of the Chair to make sure that every member of the committee has an opportunity to ask whatever questions he or she wishes, to a maximum of ten minutes. Once that has been done the Chair will recognize whoever indicates that he or she wishes to ask questions. If it is the same person each time, then that is the way it will go.

The next name on my list is Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chair.

Mr. Minister, I have basically a question for dates, I guess, an update on the status of the amount of fill at the Baie Verte site, just basically to find out where it is now. I know the second proposal went in for the assessment, environmental, and just what time frames are we talking about, where it is cut off, and when decisions will be made on that.

DR. GIBBONS: I have to say, Mr. Shelley, I am not up to date on exactly where that one sits right now, so I will ask Paul again, as he would be... I haven't heard anything on it.

MR. SHELLEY: I just want to know the basic time frame, even if it is not exact. I just want to know where it is right now.

DR. GIBBONS: I have no idea.

MR. DEAN: Thank you, Minister.

Mr. Shelley, my understanding was that the revised environmental review report for the Baie Verte mine fill project was to be submitted to the Department of Environment and Lands last week. I am not aware that has actually taken place, but I think the plan was that it be submitted late last week. Then, I guess, there would be another forty-five day period -

MR. SHELLEY: Yes, that is what I am not sure of. I just want to know the time frames, really.

MR. DEAN: I think it is forty-five days - I stand to be corrected on that - whereby the Minister of Environment and Lands announces that she has the revised preview report and it is available for public viewing for that period of time. So she invites comments from the public for, I think it is forty-five days.

MR. SHELLEY: Okay, then to continue with the process - I mean that's what I am trying to find out - so once it is submitted to the environmental minister, she announces that and then gives it forty-five days from her announcement for any input from the public, I think that's right - and then after that?

DR. GIBBONS: I can tell you what is going to happen with that, it is not a project of the department -

MR. SHELLEY: No I know but it is related to mines and energy. So I just thought I would ask it here to see -

DR. GIBBONS: Yes, they just proposed to use the pits at Baie Verte between that company and the environment department.

MR. SHELLEY: Okay, so you cannot (inaudible).

DR. GIBBONS: I really don't know.

MR. SHELLEY: Just one final other quick question, for another update again. Even since we talked the last time, of course like the minister now, I hear so much hearsay and everything about the gold situation there and I've heard it again this week. So I was just wondering if there is any update on that particular project?

DR. GIBBONS: As far as I know they still haven't got their money finalized. I don't know if Mr. Dean has everything in sync since we were there last, a week-and-a-half ago. I have not because I have been away. I only spent two nights in my bed in the last ten days so I have not been here very much.

MR. SHELLEY: Okay, I just asked again because of course it is the same drawn out thing and I keep getting asked by the media and everybody else as well too.

DR. GIBBONS: Paul does not have anything either but we did have some information related to your district regarding the Terra Nova project. Apparently Cliff Resources has now taken its option for 50 per cent and Paul can tell you the details of that, Paul Dean.

MR. SHELLEY: Okay, that was my next one.

MR. DEAN: On May 4, Cliff Resources exercised its option to purchase 50 per cent of the Terra Nova operation at Baie Verte. They purchased that from Princeton Mining, so Princeton is no longer involved in the Baie Verte project at all. Cliff will actually own 50 per cent of the project and is committed to spend 50 per cent of any additional funding required to get the operation up and running efficiently.

MR. SHELLEY: So it looks very positive, as of right now anyway. Is that fair to say?

MR. DEAN: Yes, I believe so. My understanding, Mr. Shelley, is that at the present time there are some difficulties operating the plant but that the prime cause of it appears to be the water temperature. The water in Baie Verte is very cold at this time and some of the fibre is not behaving as it should in these cold water temperatures but it looks like that problem will be overcome as water temperatures improve.

MR. SHELLEY: Now as far as I understand it, the Cliff Resources Group or the Terra Nova Group were actually talking with Enterprise Newfoundland and Labrador about assistance and upgrading of some of that equipment. Do you know if there is any status on that? Are you aware of that?

MR. DEAN: No, Mr. Shelley, I'm not aware that there is any change in the status of that request.

MR. SHELLEY: Okay. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Shelley.

In keeping with the ruling that the Chair made a few minutes ago, we go to Mr. Whelan.

MR. WHELAN: Thank you, Mr. Chairman.

Mr. Minister, I just wanted to get some sort of an update - to change the topic somewhat - with regard to Hibernia and the delivery of oil from Hibernia, specifically dealing with tankers. Will there need to be tankers constructed for that or will they be using tankers that are already in existence? If so, what companies will be involved with it?

DR. GIBBONS: Mr. Whelan, they propose to use new builds. At this time they are talking about two, possibly three, with the question being whether or not there is a trans-shipment facility. If there is a trans-shipment facility, one, two or whatever number of trans-shipment facilities, then they probably only need two tankers that will be purpose built, new tankers. If there is no trans-shipment facility they will need three tankers. The expectation now is that they would still have first oil in late 1997. The original schedule called for first oil by July of 1997 but as a result of announcements that we have all heard in the last few weeks, it looks like they are going to miss the tow-out window in 1996 for the GBS. So that it would be towing out early in 1997 and they hope to have it on site by mid-year in order to have first oil by December. That is their present target. People have acknowledged: Well, December could become January or February, but they are still targeting first oil in December 1997, so the first tanker would have to be available by that time, or probably the first two I think would be available by that time.

So they would be new builds. There are proposal calls out now for the selection of contractors to build these tankers or provide these tankers. There hasn't been any final decision at this time as to who will get that contract. In the fall of this year a decision will be made as to who will get the contract for the tankers. They are looking at various means of getting them (inaudible). They will be new, ice-reinforced, double-hulled and things like that.

MR. WHELAN: I should have included in that question as well supply vessels. I was wondering what port would be doing the servicing for the Hibernia site, or for the Hibernia oilfield. Will it be the site itself, or will it be St. John's or some other more convenient area?

DR. GIBBONS: In that regard I don't think there has been any final decision made as to what port will be used. They are going to be looking at the various port options. Construction of supply vessels has been let. Marystown has won the contract for two and word is that there may be a third one, there is an option for a third one. So there would be two new built and possibly a third one for that. Marystown has the contract for the first two. You are only talking about two or three vessels, you are not talking about a lot of shipping, so it could well be St. John's, but it could be some other ports. People have speculated that there may be some other ports. What is the status of that right now?

AN HON. MEMBER: (Inaudible).

DR. GIBBONS: No change from what I've said, but -

MR. WHELAN: When the rig is moved to the well head and production starts, will there be a lot of activity with regard to exploration as well as exploitation at that time?

DR. GIBBONS: Yes, we anticipate that there will be extra drilling starting then in general in the region. For the Hibernia development alone there will be over eighty wells drilled from the GBS very quickly, so that is all from the gravity-based structure itself. We anticipate that once the Hibernia rig goes to sea then there will be more exploration all around Hibernia. Because there is still a lot of geological potential and there are a lot of structures that have never been drilled. In another couple of years it will be very busy out there, I believe.

MR. WHELAN: With regard to the offshore and Labrador, a number of years ago there was quite a bit of activity up there and I understood they were fairly optimistic that something would come of that. Have they lost interest in that or is it still just on hold?

DR. GIBBONS: The discoveries in Labrador turned out to be primarily gas rather than oil. There was a small amount of oil associated with a couple of discoveries I think, but primarily gas. There are five discoveries in the Labrador region and there are large gas fields. Particularly in the Hopedale Channel there is a very large one. Presently it is a matter of demand for natural gas and the economics of getting gas ashore. There is no shortage at this time from mainland sources and the Labrador gas would probably be some of the most expensive we could consider developing now, considering where it is and how far away it is from markets.

There is some thought that maybe there will be development in the next few years in the Nova Scotia gas, in the Sable Island region. I know that the companies have been doing some changing around of ownership positions over there to position themselves for future development there. Again, that is much closer to the market in the northeastern United States, eastern Canada, where there would be a possibility of shipping gas. Sometime in the next century I believe we will see development of the Labrador gas. I think you are talking two or three decades or more down the road. But it is a gas field rather than oil fields, so it seems like companies have backed off from exploring for that further right now.

MR. WHELAN: Thank you, Sir.

MR. CHAIRMAN: Thank you, Mr. Whelan. Ms. Verge.

MS. VERGE: Thank you. I will come back to Hydro. CF(L)Co, which owns the Upper Churchill, from what we have heard, will go into a deficit position in about four years time, with the deficit becoming progressively worse, or the shortfall of revenue compared to operating requirements becoming greater as the years go on. How does the government propose to deal with the projected CF(L)Co deficit?

DR. GIBBONS: Ms. Verge, the truth of the matter is, or the fact of the matter is, that is not going to happen in four years time. For years there has been speculation of when CF(L)Co costs might outstrip CF(L)Co revenues, and there have been a lot of projections over time. She could probably look back to her own time in government and realize that at one time there was a projection that CF(L)Co was going to run into a deficit by 1983. This is 1994. It didn't happen in 1983. It didn't happen a few years later when people were projecting it was going to go in deficit, and other people have speculated at certain other times that CF(L)Co would go into deficit by a certain date. It is not true that CF(L)Co will go into deficit in about four years time. That is not the case, and right now, based on our detailed analysis of CF(L)Co revenues and costs, and how we project these revenues and costs, we don't foresee any problem in the next few years, and we frankly don't foresee any problem that we will not be able to handle in some way. We think CF(L)Co is safe.

MS. VERGE: Would the minister table, give the committee members, copies of the government's detailed analysis of CF(L)Co?

DR. GIBBONS: I don't have a copy of the detailed analysis. We have had the people at Hydro and CF(L)Co work together on this, and look at cost and so on, and I don't have a piece of paper that I am able to table. I could certainly look into the matter and see whether there is something we could table, but I can assure her and others that everything that we have seen indicates that we are not going to have a deficit position in the near term, and I have not seen anything that would indicate any reason for us to have concerns for many years. If there is anything happening in the distant future, I think we will certainly be able to handle it.

MS. VERGE: The minister did say that the government has had a detailed analysis done, and I am asking for a copy of that detailed analysis.

DR. GIBBONS: We certainly ask the Hydro people regularly to review the cost and the revenues related to its operations, and we asked them to do that relative to CF(L)Co. I will check into that matter to see if there is anything that we might be able to table, but certainly about a year or so ago - I can't remember the exact timing - I had a review of CF(L)Co cost and revenues and found no reason - no reason at all - to have any concerns about it, so I think we should stop spreading the misinformation that CF(L)Co is going to go into deficit in four years. That is not the case; it will not happen.

MS. VERGE: Well, people might be more trusting of that statement if they could see a copy of the detailed analysis. Now the minister has said that it is not his staff in the Department of Mines and Energy, it is not public servants who work at Confederation Building who have done this detailed analysis, or who have a copy of the detailed analysis, or who know about the detailed analysis. It is the people at Hydro who have done it and know about it, the same people who, with privatization, will work for the private sector and will be at the command of whatever mainland private interests own Hydro. Doesn't the minister think that the citizens and taxpayers of Newfoundland and Labrador have a priority claim to that detailed analysis over the mainland investors who will end up controlling a private Hydro?

DR. GIBBONS: I don't see mainland investors controlling a private Hydro having any dealings to do with CF(L)Co. CF(L)Co. operates with its own independent board of directors, its own independent president. Sure, it reports through the Hydro group at this time and they also report to me as the minister. I deal with them. We are still going to have good people on that board and monitoring every cost and every revenue of CF(L)Co. in the future.

As I said a moment ago, I will check to see whether there is anything that might be appropriate to make public. I haven't seen a written out document, text, like that, but we have had continued assessments of the cost of all of our operations and one of them is CF(L)Co. I'm pleased with what I've seen and we are not going to go into a deficit position in the near term, and certainly we should not be spreading such erroneous information. It is no more than the speculation that was there in the past when people, as I said earlier, were speculating: It is going broke in 1983, or it is going broke in some other year. It didn't happen, it is not going to happen now. A government of the future that is still going to continue to own two-thirds approximately of CF(L)Co. will ensure that things are done in an appropriate way, that we will not have a problem.

MS. VERGE: If the minister is so confident in saying that CF(L)Co. is in great shape and won't in a few years time go into a deficit position why won't the minister make public projections of revenue and cost year by year?

DR. GIBBONS: As I said, I will check to see if there is anything that we may be able to make public.

MS. VERGE: But why wouldn't you make it public?

DR. GIBBONS: I will check and see.

MS. VERGE: Why wouldn't you share it with the public of the Province?

DR. GIBBONS: I will check and see what is possible, what is in that kind of form that we might be able to make it public. But we do continue to monitor it, the CF(L)Co. board continues to monitor it, and the CF(L)Co. report is published annually. We all know, based on information that has been made public, that CF(L)Co. had a net profit again this year of $11.2 million. It still has a considerable profit, a considerable cash flow positive, and we don't foresee any problems. The analysis that we've had done indicates that we should not have any problems. I don't think we should be trying to make something negative of something that is not a negative.

MS. VERGE: How can we help it when we don't have access to the analysis and the financial projections?

DR. GIBBONS: As I said, I would check to see if there is anything that might be able to be made public on that but I am satisfied myself. I have seen the analysis, I've seen the details. I know the present situation with CF(L)Co., I know the profits that were made last year by CF(L)Co., and we have no indication of any problems as indicated by the hon. member. I think we should stop spreading that erroneous information around. I've heard it several times in the last few months and I wish you would stop spreading it.

MS. VERGE: If the minister has heard it several times in the past few months, and if the minister has access to the analysis that was done of Hydro, why hasn't the minister put out his projections to show what he believes will be the likely annual revenue and cost of CF(L)Co. over the next several years?

DR. GIBBONS: As I said, I will check to see if there is anything that may be done in that regard. What I did say is that I have heard yourself, Madam Member, make the statement in the past -

MS. VERGE: Yes, I've made the statement because I believe it is true.

DR. GIBBONS: - (inaudible) tried to correct it and say there is no problem, and it keeps getting repeated. There is no problem. We are quite comfortable with that. There is no problem.

MS. VERGE: I would suggest to the minister that people are not going to believe him unless he lays out his figures and gives a satisfactory explanation of his estimates that CF(L)Co. is in great shape.

Now, questions about Hydro. The Premier in trying to defend the indefensible, in trying to tell people that privatizing Hydro will be good for them, suggests that rates will go up only about 11 per cent in the next five years but that it is likely that a private operation will lead to some efficiencies and some reduction in jobs which he hopes will be brought about through attrition.

I notice in the 1983 annual report of Hydro, which the minister tabled in the House of Assembly last week, that on Page 33 there is an indication of total employment of the Hydro group of corporations year by year from 1984 to 1993, inclusive. Now, for the five years that the minister and his 'real change' administration have been in office the government has eliminated probably over 3000 public sector jobs, many jobs in the health and education sectors, health particularly, however there has been no reduction in jobs in the Hydro group of companies. It has not changed appreciably but it is slightly up from the number of jobs five years ago.

Has the minister made any effort to trim the payroll in the Hydro group of companies, or lower the number of jobs? Obviously the number is slightly up from what it was when the minister assumed office. Was there any attempt to reduce the number of jobs at Hydro?

DR. GIBBONS: I think it was about a year ago they laid off about twenty-eight people around the Province in terms of its permanent staff, and, I think if the hon. member looks at that report the numbers did decrease somewhat from 1992 to 1993, but there did have to be some additions in certain sectors in Hydro so the number of permanent people is 1229 compared to 1246 in 1992.

MS. VERGE: It compares to 1219 in 1988.

DR. GIBBONS: And 1219 back in 1988.

MS. VERGE: And the number of temporary employees increased from 215 to 266.

DR. GIBBONS: The number of temporary employees fluctuated up and down depending on certain things that the Hydro group were doing, where they would need to hire temporary employees. In that group of temporary employees you get a lot of apprentices as well and some others in that category. I know there were thirty or so apprentices this year in the number.

MS. VERGE: And co-op students.

DR. GIBBONS: And students as well. There are students and so on included in that temporary number. They come and go.

Hydro regularly has had assessments done as well on the staffing levels it needs. It has had external groups come in and review its operations to determine what would be the optimum number of people and what it should do with its whole organization. It has been told it is fairly efficient but do this and this. As I said about a year ago they did lay off about twenty-eight people around the Province as they were doing some reorganizing, but the number has not changed dramatically.

MS. VERGE: Does the minister believe that the current staffing level is about right, or does he think it is excessive?

DR. GIBBONS: The external people who have analyzed Hydro consider it to be an efficiently run operation so it is not for me to speculate otherwise. In talking about privatization we have said many times that we do not consider this to be a jobs issue and we leave it at that.

MS. VERGE: The Premier has said that he expects that a private corporation would reduce payroll and he hopes it would be done through attrition. Would the minister make public the external evaluations of staffing levels at Hydro?

DR. GIBBONS: That may well already be public. I do not know but I will check into that.

MS. VERGE: A lot of the people out in the population who are worried about the government's proposal to privatize Hydro would like to have the external evaluation of Hydro's staffing level.

DR. GIBBONS: I am not sure. As I said, it may already be public because the Public Utilities Board requires that Hydro do an assessment regularly and I think it is supposed to be filed. I am not 100 per cent sure -

MS. VERGE: Well in that case the minister should have no trouble in giving it to the committee.

DR. GIBBONS: - I think it is supposed to be filed with the Public Utilities Board, so I could check on that matter and see the status of these assessments that have been done but certainly -

MS. VERGE: But would the minister in particular, provide copies of the external evaluation of Hydro's staffing levels to the committee?

MR. CHAIRMAN: Order, please!

The hon. member's time is up.

DR. GIBBONS: I will check on that and see what is possible.

MR. CHAIRMAN: Dr. Hulan.

DR. HULAN: Thank you, Mr. Chairman.

Mr. Minister, as I listened to you answer the questions, I know you are very pleased with so many things going on in this Province right now and the difficulties we have, that you always look at the glass as half full and not half empty, and so I commend you for that.

The gold deposit that was recently announced on Glover Island, I heard it under a news report; is that real or, is there any information you may have on that right now?

DR. GIBBONS: Yes, Dr. Hulan. There is no question it is real; the question is I guess, the size of it and whether or not it is economic; that was one of the projects that we helped support last year under our exploration projects owned by a local Newfoundland company, and I remember seeing a press release myself, from the company just a few days ago, where, they announced some of their latest figures, and I think they said it was something over 4 million tons of reserve at .06 gold. They still need to do more work on it and I think they will be doing more work on it.

I have not heard the details of their plans for '94 yet, but certainly that is one of our better prospects. It is one of the better prospects for the Province but it is still not a mineable deposit. I would like to see the grade a little better; the tonnage is good if the grade were a little better, but some of the other small deposits that we know, for example, on the Baie Verte Peninsula, have better grades, and the Hope Brook mines, instead of .06 I think it is .14, a combination of grade and size, but clearly the company will be doing more work. It is a very interesting deposit and a very interesting area.

DR. HULAN: Just one more question, Mr. Minister, and I will go back to the peat-burning project proposal for two of the Stanton groups. Considering the economic multipliers that would be involved in that project in the District of St. George's and the general area, and considering the importance of that project if I understand it correctly - now you can correct me here - to the survival actually, not the total survival but a major factor probably in the survival of the Stephenville mill, you and your officials I know are taking all of these things into consideration but putting it altogether, how positive is it looking?

DR. GIBBONS: Well, I really don't know, Dr. Hulan.

As I said earlier, it has to be taken in the context of the electricity demands of the Province and really, Hydro should not be putting on stream new supplies of electricity until they are needed, because if they are put on stream before they are needed someone has to pay for them, particularly the rate payers of the Province will have to pay for them, so I would rather not speculate on it at all, but we have done a lot of work with the companies over the last couple of years, and I just wish the economy was booming along so that we would not have to question the next sources of supply, but we would like to have the least cost options going to the grid because the rate payers have to pay for them. There is a process in the new proposal act, the Power Control Act, which would see the Public Utilities Board evaluating all possible options for future development and picking out one which is going to be the lowest possible cost to the rate payers.

As I said, I don't speculate on it, but I would like to see a booming economy with lots of new projects coming on in electricity.

DR. HULAN: One final comment, again, because of the problem the closure of Domtar at Flat Bay is creating, I met with a group of individuals this past weekend who are interested in something that I think I made comment on last year in this committee review, the tremendous resource that we have here in this Province with regard to peat - not for burning peat, but providing peat to the Middle East as a source of organic matter for their sandy soils, and that is a real thing. We now have one company doing just that in the form of an organic fertilizer, Genesis out of the Corner Brook area, but there is a possibility of a major industry starting there, or at least there is some indication that these people... I don't know if they have contacted you people yet, but this is just in its infant stage of enquiry, I guess, and they came to me since it is in my district, but it is a possibility that we may have something there. They are specifically interested in the Domtar site.

DR. GIBBONS: I am not aware that anyone has come to us recently relative to the Domtar site in that regard, but over the last few years occasionally we have had people come in to us and talk about peat for export, using tankers or some other way, and there is nothing more we would like to see if they can do it economically. Transportation cost is such a major part of the cost, peat itself not really being a high value product.

DR. HULAN: Am I to understand then, Mr. Minister, that any enquiry in the past, then, has not come through because of economics of transporting the product?

DR. GIBBONS: It seems to be a concern about the economics of transport. We have been looking at mechanisms for transporting it economically, but certainly we are very supportive of any company that wants to develop a peat bog for export. We have huge supplies, as you well know, so if that can be done and someone can do it economically then let us proceed with it.

DR. HULAN: I am especially interested, since I am the MHA of peat bog, because we have so much in the District of St. George's. Anyhow, we will follow that up and be encouraging it, I can assure you.

Thank you, Sir.

DR. GIBBONS: You are welcome.

MR. CHAIRMAN: Mr. Whelan.

MR. WHELAN: Mr. Minister, with regard to Newfoundland Hydro again, I understand that the sole mandate of Newfoundland Hydro is to create electricity. Is that true?

DR. GIBBONS: I see that as their mandate, to produce and distribute electricity for sale. I think that is their number one prime mandate, yes.

MR. WHELAN: A privatized Hydro, would they have the same mandate or would it be expanded?

DR. GIBBONS: I would see it the same way. That would be their prime mandate, to produce and distribute electricity at the lowest possible rate for the Newfoundland rate payer.

MR. WHELAN: New Hydro itself, would they have the capability, the legal capability, of expanding to other facets of business, based on the prime business of producing electricity?

DR. GIBBONS: I personally prefer to see them stick to their mandate, electricity distribution. We have the example in the province of Newfoundland Light and Power, which is again a pure electricity company in its own right. It produces some, distributes a lot, but its parent company, Fortis, has spread out into other types of ventures. It has spread out into other types of ventures as a parent company, and I would personally prefer to see a private Hydro concentrate on its key business, its core business, but I don't know what a future might hold in terms of a diversification away from that by a parent -

MR. WHELAN: I just asked a hypothetical question. You have addressed a number of hypothetical questions this morning, so I suppose one more won't hurt. Is there a possibility that a new Hydro, a privatized Hydro, might create more jobs than the potential loss of jobs?

DR. GIBBONS: Well, I don't know. If you concentrate purely on the electricity part, I don't see a great possibility for expansion in the pure electricity part.

MR. WHELAN: Well, I was thinking along the lines of diversification, their ability to diversify as opposed to (inaudible).

DR. GIBBONS: Yes, but certainly the ability is there to diversify, to do like Light and Power has done and get into other types of ventures which may result in some growth in other sectors. For example in the Light and Power case where they have gotten involved with NewTel, trust companies and others. There may be other sectors since Hydro might reorganized itself - involved in but we would want Hydro, as an electrical company, to concentrate on electricity. That would be my view, that we want to see it produce and provide electricity to the rate payers of Newfoundland for the lowest possible cost.

MR. WHELAN: I heard a news item, I think it was a couple of weeks ago, something to the effect that there was a revived interest in modifying cars to burn propane or some other types of natural gas. Is there anything new on that in the Province? Is there any renewed interest in this particular area?

DR. GIBBONS: Yes, about a year ago we signed a joint agreement with the federal government and with Superior Propane for five years to try to convert up to 2,000 vehicles with emphasis being on fleet vehicles because they have higher mileage and that is when the economics become better. So that we - well if we continue to promote for the next few years, in our case we reduce the gas tax by half. We cut it down to about 7 cents per litre from, I think it is 13.7 cents or so otherwise. So we are doing that to help stimulate the propane sector because it is an environmentally friendly fuel and it is one that we do not use a lot for transportation. Agencies that have big fleets of vehicles, travelling long distances, can do it economically using propane.

MR. WHELAN: How is the program working out then?

DR. GIBBONS: It seems to be working out fairly well.

MR. WHELAN: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Whelan. Ms. Verge.

MS. VERGE: Back to Hydro, the minister just said that he would want or the government would want Hydro to continue to produce electricity to serve Newfoundland and Labrador consumers and sell it to consumers at the lowest possible cost. If that is really what the government wants then why is the government even thinking about privatizing Hydro because privatizing Hydro is going to lead to - very quickly after the first couple years of subsidiary and cushion - to annual rate increases of $50 million or so? How can the minister possibly talk about providing electricity at the lowest possible cost through a privatized corporation?

DR. GIBBONS: I believe that the hon. member is confusing two factors again. There are no subsidiaries going into this to do -

MS. VERGE: What about the $15 million a year rate stabilization fund, the $20 million pension top-up and the rebate of federal corporate income tax?

DR. GIBBONS: The federal corporate tax, PUITTA, is going back through the companies to keep rates down and that will continue, that is not a rebate to the companies. It is to keep rates down and that will continue. I don't know what the pension top-up has to do with it at all. That is a liability of the government, it will always be there and it is being addressed at this time. The $15 million rate adjustment fund is to accommodate a phase-out where the industrial sector right now makes a contribution to the rural deficit for the rural diesel areas and other rural areas that do not pay their full share. While we are phasing it out from the industrial customers we are providing this $15 million fund to phase it into the other sector and that is all (inaudible).

MS. VERGE: It is a subsidiary but the point is the rates are going to go way up -

DR. GIBBONS: No they are not.

MS. VERGE: - to the tune of $50 million a year, they have to.

DR. GIBBONS: No, no they don't.

MS. VERGE: The government's propaganda - the Premier's propaganda acknowledges rate increases of 11 per cent over the first five years. That is a distorted projection but objective assessments, including that of Wade Locke at Memorial's Economics Department, indicate annual rate increases of $50 million or more.

DR. GIBBONS: No, our analysis shows and we have made it public from the first press conference on -

MS. VERGE: That press conference was -

MR. CHAIRMAN: Order, please!

I would have to remind the hon. member to my left that she is not giving the minister time to answer her questions, she keeps interjecting. So I would suggest that if she wants the minister to answer her questions that she give him time to do so.

DR. GIBBONS: The net cost for us, as a result of this, we have said is approximately $25 million per year and we do not see that net cost increasing per year in any way. As far as I know it stays around $25 million per year.

MS. VERGE: So you are admitting to annual rate increases of $25 million?

DR. GIBBONS: No, I did not say annual rate increases. I said there was a cost of $25 million to recapitalize the company and that does not jump by $25 million a year after that. It is approximately $25 million extra and that translates into, as we showed, about a 2 per cent per year increase for the first five years compared to a 1.7 per cent increase per year for the first five under a public scenario and that is assuming that no efficiencies are found in the private sector.

MS. VERGE: But why would you insinuate that efficiencies are going to be found when just a few minutes ago you said that an external objective evaluation of Hydro concluded that staffing levels were appropriate and that it is an efficiently run corporation?

DR. GIBBONS: Well, efficiencies are not solely related to staffing levels, certainly not solely related to staffing levels. There are other things that can cost the company extra. I feel and others feel that over time the company would be able to operate more efficiently as a private company then it now operates burdened by government.

MS. VERGE: How do you think a private operation could improve efficiency if it is not reducing payroll?

DR. GIBBONS: Well there may well be I guess but right at this time we are not speculating that there would be any reduction in payroll and -

MS. VERGE: But why are you speculating there might be a reduction in (inaudible)?

DR. GIBBONS: But there are things that can be done. Right now for example everything has to be done through the public tender process in government and we burden the company with having to do things that way. The company may be able to find ways of doing things without having to do that and do it cheaper. I think that a private company will probably find ways to do things cheaper and it is not for me to speculate on the ways they may find -

MS. VERGE: Well if you think the public tender process is an unnecessary burden why don't you remove that now then, you have that power as a government?

DR. GIBBONS: The nature of government is that we require everything to be done through the public tendering process.

MS. VERGE: Well you don't have to if it is inefficient, if it is costing. What assumptions is the minister making in projecting that there will not be significant rate increases? The debt equity ratio now is 80/18 according to the annual report the minister made public last week.

DR. GIBBONS: That is correct.

MS. VERGE: What debt equity ratio is the minister assuming that a privatized corporation would have?

DR. GIBBONS: What we said publicly, in the first press conference, is that we anticipate that a new Hydro, a private Hydro would have a debt equity of about 57/43. Approximately 57/43 which is similar, I think, to what Light and Power is today.

MS. VERGE: Okay, does the minister acknowledge that debt is a fair bit less expensive than equity?

DR. GIBBONS: Well that depends on the interest rates.

MS. VERGE: Obviously.

DR. GIBBONS: It depends on the rate of return on equity.

MS. VERGE: So what figures are in the ministers assumptions for interest rates?

DR. GIBBONS: I don't have the details of all that in front of me and we have never made public all these details either, and I don't think I -

MS. VERGE: That is why people don't believe what you are saying, with respect. Is the minister expecting that the Public Utilities Board would order the same rate of return equity for a private Hydro as for privately owned Newfoundland Light and Power?

DR. GIBBONS: I don't see why they wouldn't treat both private companies the same. Of course.

MS. VERGE: Okay. The rate of return now for Light and Power, rate of return on equity, is what? About 13.7 per cent, 13.5 per cent?

DR. GIBBONS: I've heard that number repeated by yourself. I don't know what the rate of return is by Light and Power at this time. I would say that the rate of return that Light and Power gets now was set the last time it went in for a rate hearing. I'm not sure if that was 1991 or 1992. It was a long time ago. That was before the recession we've had.

MS. VERGE: Before interest rates went up.

DR. GIBBONS: Before the recession we've gone through, when interest rates were quite high, when they were in there.

MS. VERGE: The average annual interest rate paid on Hydro debt, about 10 per cent?

DR. GIBBONS: That is in the book if you can calculate it. I haven't calculated the average. It is there in the annual report that we tabled last week and -

MS. VERGE: About 10 per cent.

DR. GIBBONS: - it varies considerably. It is probably in the 10 per cent to 10.5 per cent range. I haven't taken out a calculator and calculated it.

MS. VERGE: You must make some assumptions about interest rates to be able to project -

DR. GIBBONS: Sure.

MS. VERGE: - the difference between rates under public ownership and private ownership.

DR. GIBBONS: Of course.

MS. VERGE: What assumptions did you make?

DR. GIBBONS: I don't know the details right now. I can't give you the details off the top of my head.

MS. VERGE: Is that because you are not really involved in any of this privatization?

DR. GIBBONS: No, that is not so.

MS. VERGE: Is that because the Premier is handling it and has marginalized the minister and the Department of Mines and Energy?

DR. GIBBONS: No. I haven't tried to memorize all the figures related to this, and I'm not going to try to memorize all the figures related to this.

MS. VERGE: You didn't bring them with you this morning because you didn't think it would come up?

DR. GIBBONS: No. I'm hear to defend the twelve point something million dollar budget of the Department of Mines and Energy and Hydro does not appear in this budget as a line item. It does not appear in this budget, it did not appear last year in this budget, it does not appear this year, and would have no reason to appear any year.

MR. CHAIRMAN: Those figures are not in the estimates that we will be asked to approve today are they, Mr. Minister?

DR. GIBBONS: No they are not (inaudible).

MS. VERGE: We already had a discussion about this the last time. One of the minister's nominal responsibilities, even if the Premier is in fact exercising it, is Hydro. The minister's salary is in these estimates.

The difference between the average interest rate paid on Hydro debt, 10 per cent, and the 13.7 per cent -

DR. GIBBONS: Ten per cent, 10.5 per cent. I haven't calculated it.

MS. VERGE: It is not hard to figure out.

DR. GIBBONS: I'm not going to play games with the hon. member on numbers, nor am I going to play games with the hon. member, but what may or may not be the rate of return on equity that would be allowed today by (inaudible) -

MS. VERGE: But you have to make assumptions.

DR. GIBBONS: I know that.

MS. VERGE: You have to make the best educated estimates of those interest rates if you are going to make a statement about the effect on rates of privatization.

DR. GIBBONS: We have done that now.

MS. VERGE: That is what I'm asking for.

DR. GIBBONS: We have done that. I am not here to defend the details of those numbers today. I did not bring those numbers and -

MS. VERGE: Will you get them and give them to the Committee?

DR. GIBBONS: At this time we have not made any decision on when we are going to give out the details like that, and there are certain limitations on us, as you know and we have said, as to what we can put out there before we can put out a prospectus.

At a certain time we will put out a prospectus that will include all these details, but until we do that there are limitations that are put on us by securities commission regulations, and I cannot be going out in a piecemeal way with that type of information. When the prospectus is put out it will all be there, all the information you need.

MS. VERGE: The prospectus won't be an issue until legislation is passed in the House of Assembly. Surely the people expected to vote on that legislation, and the constituents we represent, should have all that information before the final decision is made.

DR. GIBBONS: I am not going to speculate on the numbers.

MS. VERGE: The problem is, you and your government are speculating on numbers, and you are giving false projections -

DR. GIBBONS: We are not giving false projections.

MS. VERGE: And you are trying to mislead people. Now, as it happens, people don't believe you.

MR. CHAIRMAN: Order, please!

DR. GIBBONS: We are giving the most accurate information we can.

MR. CHAIRMAN: Order, please!

MS. VERGE: Obviously you are not. You are saying here this morning that you don't even have the figures in your head, and you didn't bring the documents.

MR. CHAIRMAN: Order, please! The Chair has called for order.

The Member for Humber East is entering into debate, and I would remind the member that there will be an opportunity for three hours in the House of Assembly to debate the motion to concur in the report of this committee, and that is the opportune time for the member and any other Members of the House of Assembly to debate what is happening here today.

If the member has any specific questions, I would ask that the minister do his best to answer them. Other than that, I would ask that the minister not engage in debate.

Ms. Verge.

MS. VERGE: Thank you.

I thought we were here to debate the estimates of the Department of Mines and Energy. Quite honestly, I don't think there is much point for me to keep questioning the minister. The minister either doesn't know or is under orders from the Premier not to reveal the truth about whatever calculations and projections the government has done about Hydro privatization, so there is really not much point for me to continue.

MR. CHAIRMAN: Shall we call the subheads?

On motion, subheads 1.1.01 through 5.1.03 carried.

On motion, Department of Mines and Energy, total heads carried.

MR. CHAIRMAN: Before I entertain a motion to adjourn, I would like to give the minister an opportunity to make a closing statement if he so wishes.

DR. GIBBONS: Mr. Chair, I thank you and your committee. I appreciate the opportunity to discuss our estimates. Thank you very much.

MR. CHAIRMAN: I would like to thank the minister and his officials for coming again the second time. I would like to thank him for the manner in which he has been forthright with his answers to the questions. I would like to thank the members of our committee, and Ms. Verge who filled in for Mr. Woodford, and I would like to thank the other members who have been so loyal to us, the Table officers, the pages, and the people who have been working to make sure that this is transcribed for posterity. Having said that, I will entertain a motion to adjourn.

On motion, committee adjourned.