Dividing Nalcor — brilliant move or cause for concern?

While there weren’t a lot of surprises coming out of Budget 2018, one of the more interesting revelations was government’s intention to see the oil and gas subsidiary of Nalcor Energy established as a stand-alone Crown corporation. As stated by government in the budget speech, “It will work directly with the Department of Natural Resources to accelerate the growth and opportunity of our petroleum industry, returning significant value to the people and economy of Newfoundland and Labrador.”

In followup to the budget by media, the minister of natural resources suggested that by separating the oil and gas division from Nalcor, it will allow officials within that division to “better focus” (whatever that means) on the great potential that we have in our offshore. Apparently Noia and other players in the oil and gas business agree with the minister and seem to think that this is a good initiative, and perhaps it is. Let’s hope so.

Now whether this move is going to be cost neutral, as the minister suggests, is another question. Let’s face it, creating a new hierarchy, moving office space, advertising, rebranding building/office signage, letterhead, business cards, websites, etc., come with a price, won’t they?

Given what one would assume to be a reduction of responsibilities of Nalcor’s CEO resulting from this initiative, you may wonder if that salary will be adjusted downward. I highly doubt it. After all, a contract is a contract, right? Speaking of remuneration, what about the CEO of the new oil and gas corporation? Will the salary and benefits package of Nalcor’s current vice-president of corporate services and offshore development be simply transferred into the new CEO position, or will this new title demand a similar compensation package as its counterpart in the hydro side of the business? And then there’s the board of directors for this new corporation. What costs will be associated to its establishment and ongoing operations? I guess we’ll have to wait and see.

On an unrelated but important side note, I wonder if this new entity will be afforded the same veil of secrecy as Nalcor currently enjoys under the Energy Corporation Act. There are certainly many questions to be asked, and hopefully answered, before this parting of ways takes place.

And speaking of questions, here is a big one: while we are all enamoured of this new and exciting initiative to bolster our fortunes in the oil and gas industry, what plans may be going on behind the scenes in the remaining hydro side of the business? Is this separation just about rebranding our oil and gas division, or should we be concerned about other plans afoot? For example, could there be any plans to, I don’t know, perhaps rid ourselves of a few assets? Could there be plans to explore any form of privatization? Could there be any potential new deals in our future involving our partners in Nova Scotia? How about our friends in La Belle Province?

I honestly don’t know the answers to these questions and perhaps I’m being too skeptical. My paranoia aside, I would suggest that as we focus on the Muskrat Falls Inquiry and the establishment of our new Crown corporation (devoid of Muskrats), that we also remember to keep a watchful eye on the happenings at our once great “Energy Warehouse.”