During debate of the 2017-18 Supplementary Budget, Porter Creek South MLA Ranj Pillai revealed shocking details about a $39.2 million loan from the Yukon government to the Yukon Development Corporation (YDC) that was re-financed by the former Yukon Party government in 2015. Here’s the background.
The Liquefied Natural Gas facility, built by the Yukon Energy Corporation (YEC) in 2015, cost $42 million to build. YDC contributed $22.4 million to YEC as a capital contribution and the remaining $16.8 million as loans. YDC borrowed that money from the Government of Yukon, and the loan was due in full on March 31, 2018. Unfortunately, YDC cannot currently pay it back.
Originally YEC was supposed to pay back the entire amount. However, a decision was made in 2015 by the Yukon Party government to forgive $22.4 million of the loan and turn it into a grant. This decision was never announced publicly. This means that YDC owes $39.2 million to Yukon government but will only be recovering $16.8 million of that from YEC and must make up the difference.
The former government’s decision to turn a portion of the loan into a grant was made in order to improve the books of YEC and allowed them to delay a rate hearing in 2016 on the eve of an election.
“The former Yukon Party government did not forgive the loan it made to YDC. To do so would have reduced the government’s surplus by $22 million and likely would have forced it to deliver a deficit budget in the spring of 2017.
The full lump sum repayment schedule for March 31 of this year would have been financial challenging for Yukon Development Corporation. It would have required borrowing from external sources, which would impact the Yukon government’s debt cap. That was the only source. The money wasn’t there — had to go external — debt cap would have gone from whatever we were — I think it was almost $200 million when we got here. It would have been more.
It is also important to understand that the transaction on the books between the Yukon government and the Yukon Development Corporation — that loan that wouldn’t have been able to have been paid back with the current cash flow — showed an asset on the books for the Yukon government, so actually, it showed that they had more money, but if you look at what was actually going on, there was no loan. What does that mean? I don’t know. Some may say it would have been the fact that the government was in — I don’t know — maybe a deficit for years more than what they said, but they didn’t communicate this to the public. That is why this is such an important piece.” – Porter Creek South MLA Ranj Pillai
The Official Opposition was conspicuously silent in response to these revelations in the Legislative Assembly, which suggest the previous Yukon Party government hid a staggering deficit from Yukoners. The Third Party was understandably frustrated. Takhini-Kopper King MLA Kate White noted that she could not find the transfer of $39.2 million to YDC in any of the budget documents produced under the Yukon Party government between 2012 and 2016. The Leader of the Third Party demanded more information.
“I am not using it loosely when I say that it strikes me that this is requiring some sort of forensic review. We are talking about a serious misleading of the Yukon public and this Legislative Assembly — not once, but over the course of many years.” – Whitehorse Centre MLA Liz Hanson
MLA Pillai informed the Legislative Assembly that the loan has been renegotiated by the current Liberal government to ensure YDC is not forced into debt.
“We have worked with the Department of Finance to refinance the terms of the loan to ensure that the entire amount, including interest and principal, is paid to the Yukon government. We are doing this for Yukoners. We are going to clean this up for Yukoners. By extending the amortization period over a reasonable time frame, aligned with the actual infrastructure, Yukon Development Corporation is able to use internal cash flow to repay the full amount of the loan without impacting the Yukon government’s debt cap.” – Porter Creek South MLA Ranj Pillai
