January 10, 2017
For Immediate Release
What is the Status of the Generic Royalty Regime?
Keith Hutchings, Natural Resources Critic for the Official Opposition, is asking Natural Resources Minister Siobhan Coady for an update on the status of the generic royalty regime she has been mandated to establish for offshore petroleum developments.
Hutchings said, “After the former administration announced the details of a generic royalty regime on November 2, 2015, Mr. Ball was reported as saying he was supportive of the initiative. He said at the time that a Liberal government ‘won’t reinvent the wheel from scratch‘. He said if such plans are ‘ready to roll out, then we will implement those plans. We will not be slow‘ – but the Liberals have been very slow and have announced nothing despite their promise to act swiftly.
“In fact, the Ball Liberals placed this commitment in the 2016 Throne Speech, their policy agenda for the 2016-17 year. Yet, there is no sign of the generic royalty regime that the previous administration had already developed and that the Ball Liberals promised in their Throne Speech to implement.”
Hutchings said, “The Natural Resources Minister was given the lead on this and specifically directed to make this happen.
The Minister’s December 14, 2015 mandate letter states: “Your actions to create conditions for increased offshore exploration and development include… establishing a generic royalty regime for future developments….” The mandate letter follows on the 2015 Liberal red book commitment (#220.127.116.11) to: “Establish a generic royalty regime, in consultation with stakeholders, that applies to all future developments. This will provide greater certainty around fiscal terms associated with developments in our jurisdiction and provide much-needed stability to operators.”
Hutchings said, “More than a year has passed since the Premier mandated Minister Coady to establish a generic royalty regime. What is the delay in implementing the generic royalty regime that we developed more than a year ago and that Mr. Ball said he would not reinvent but move quickly to implement? Why is the Minister delaying implementation, pretending to be developing something new when this has been ready to implement for more than a year? When will the Minister get around to putting the generic royalty regime into effect in order to remove the uncertainty in the industry that the delay is causing?”
“The Liberal red book prefaced the commitment to a new generic royalty regime by saying ‘regulatory certainty and maintaining an attractive and stable business environment for operators and investors is critical to the long-term success of the industry.’ If the government is really treating this as critical, then the Minister ought to be on top of the file and prepared to provide an update on progress whenever people ask,” said Hutchings.
“The Liberal government has been doing a poor job of maintaining an attractive and stable business environment. The business environment in this province for the past year has been full of uncertainty and unpredictability. Their ever-changing position on the carbon tax is adding yet another layer of uncertainty, on top of the delay in implementing the generic royalty regime. Our offshore industry is moving forward on the strength of past policies, particularly the previous government’s energy plan, but if the current government is not careful, this province will lose ground to other jurisdictions that are getting ready to leap ahead once oil prices rebound,” he said.
The PC generic royalty regime is defined at the following link: http://www.nr.gov.nl.ca/nr/royalties/generic_orr.pdf
Its announcement is recorded at: http://www.releases.gov.nl.ca/releases/2015/nr/1102n06.aspx
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Director of Operations and Communications
Office of the Official Opposition
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