ALBERTANS LOSE $ 2 BILLION PER YEAR FROM
ENERGY DEVELOPMENT, SAYS REPORT
Mistake lies with the traditional pro-industry bias of the
36 year-old Progressive Conservative Government of this province.
Albertans are not getting fair share of the province’s natural resources and haven’t been for some time. The state exchequer is losing $ 2 billion per year. Responsibility of this blunder lies with the thirty six year - old Progressive Conservative government of this province.
This was the clear message of the Alberta Royalty Review Panel’s Report, submitted on Tuesday, September 19, to the government. The report came as a rebuke of the PC government under former premier Ralph Klein, who regularly rejected calls to raise royalties. No doubt, it was one of the most extraordinary political documents this hidebound province has seen in a generation.
Getting a “fair share” of energy royalties was a defining issue for Albertans. It’s shaping up to be the defining issue for the premier Ed Stelmach and his own fledgling leadership and the Tory government’s political future.
All across Alberta, the royalty review report, since its release, after months of consultations with industry, individuals and others, is being hotly debated on radio shows and in coffee shops and restaurants. Albertans, who legally own the resources, have been short changed for years. They want the Stelmach government to stand up to the oil and gas companies. Extra royalty money, they feel, should be spent on infrastructure and education. But, his government is sometimes viewed as too spineless to introduce wholesale change to big business.
The report recommends sweeping changes to the royalty regime, including increasing oilsands levies and a new, price-sensitive “severance tax” (which goes up and down based on oil prices, from 1 per cent when oil is at $ 40 per barrel to 9 per cent at $ 120) on bitumen extraction. The report concluded that in 2006, Alberta should have received $11.4-billion from energy royalties, taxes and other levies, 20 per cent more than the $9.5-billion collected.
[The public, through the provincial government, owns mineral rights for 81 per cent of Alberta’s natural resources, so producers pay royalties (payments) to the government when they extract oil and natural gas. Currently, oilsands companies that have recouped startup construction costs pay 25 per cent of net revenues (that is, revenues minus production costs), which the panel found “unnecessarily low” in today’s climate. It wants firms to pay a fairer 33 per cent, so Albertan’s get a fair share that is still “internationally competitive.”]
The review panel also accused the Alberta government of doing a shoddy job of ensuring it collects all the royalties it should, and called for an accountability overhaul. The Auditor-General should immediately investigate the panel’s allegation that the government has missed collecting billions in owed royalties.
Recommendations, if fully implemented, will boost Alberta’s oil and gas revenue by 20 per cent or about $2 billion annually. Bill Hunter, who chaired the panel that wrote the report, said there was plenty of passion in the room. The report needs to be accepted in its entirety.
Stelmach government needs to change royalty and tax system which haven’t kept pace with the times. The reaction from the oil industry is always ‘don’t do it, leave it alone.
Industry groups and insiders immediately criticized Hunter’s report, warning it would cripple the provincial economy and stifle billions of dollars in investment. Siding with the critics was former premier Ralph Klein, whose government set up the oilsands royalty regime in the mid-1990s. He said he “fears” for the oilsands sector.
But, Stelmach says he’d stand up to big oil. He has pledged to respond to the report by the middle of October. It’s reasonable to give Stelmach’s team time to fully digest the 104-page report.
The recommendations are entirely reasonable. The panel’s recommendations won’t kill the economy, they’ll simply bring Alberta’s royalty rates in line with the rest of the world.
With Stelmach’s first test in a general election likely at most nine months away, virtually no other issue he can touch could have more impact than the royalty report -- potential for an extra $2 billion in new provincial dollars each year on one hand, and the caterwauls of an energy sector fearing change will bring trouble on the other.
After a big Tory by-election loss in Calgary, his government’s highly criticized reaction to the affordable-housing crisis and a long struggle to find peace with Alberta’s mayors on municipal funding, Stelmach can either win big or fail big on royalties. His government is running out of chances to handle an issue well.
Stelmach will look like a firm leader if he follows the report and hikes oil-industry payouts, as former premier Peter Lougheed did in the 1970s. A refusal to implement the government-commissioned review’s ideas will become the opposition parties’ anti-Stelmach rallying cry in an election.
It is believed that if Stelmach stares down Big Oil and enacts the report’s significant changes, though it goes against their traditional pro-industry bias, the Tories would give themselves a solid footing for a snap fall election. The party’s candidate recruitment schedule is positioning itself for a 2008 vote, but Stelmach has never ruled out calling an election this year.
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ONCE AGAIN, LORD RAMA OCCUPIES
CENTRE STAGE OF INDIAN POLITICS
Even as the political storm over the nuclear deal rages, the government of Dr Manmohan Singh has found itself in another controversy, last month. This time, arrived the tremors of an infinitely more lethal alarm – costruction of Ramsethu. It is the proposed channel across the Adam’s Bridge, famously known as the Rama Sethu – a bridge known to be built by Lord Rama’s army to rescue Sita from Ravan’s captivity. The underwater bridge is known in Sri Lanka as Adam’s Bridge while it is known as Ram’s Bridge or Ram Sethu in India. For the Hindus Lord Ram is a unique and unequalled symbol of national unity and aspiration.
At issue had been the UPA government’s ill-judged affidavit, questioning the historicity of Ram, in response to a PIL filed in the Supreme Court against the Sethusamudram project, has provided the BJP once again with a potent electoral slogan and an impetus to revive its Ram Setu campaign.
The RSS & BJP have been crying lay-off because it believes the submerged structure is a remnant of the bridge Ram’s army laid across the sea as it prepared for Sita’s evacuation from Lanka. Sacred, don’t dare touch.
While sources in the government, turning the tables on BJP with a counter-charge, claimed that the Manmohan Singh dispensation had only completed the formality of clearing the ‘present alignment’ after getting of the techo-economic feasibility (TEF) report for the Sethusamudram project. The ‘alignment’ entailed cutting through Adam’s Bridge, and the TEF study was commissioned after an in-principle nod in January 2003 when NDA was in power and it was the Atal Bihari Vajpayee-led government which cleared the contentious Ram Setu route.
Now, the BJP was trying to incite “communal riots” to gain political mileage in the Gujarat assembly elections, due within the next six months. It was not proper to oppose a development project for political gains. The project is expected to save about a USD 5 million per year in fuel savings.
[THE PROJECT: Even as political high drama unfolds, here is some background information on the project.
Sethusamudram Ship Channel Project (SSCP) envisages dredging a ship channel across the Palk Straits between India and Sri Lanka. The project will allow ships sailing between the east and west costs of India to have a straight passage through India`s territorial waters, instead of having to go around Sri Lanka.
Two channels will be created: One across Adam`s Bridge (the chain of islets and shallows linking India with Sri Lanka, also called ‘Ram Sethu’), south - east of Pamban Island; Another through the shallows of Palk Bay, deepening the Palk straits.
The total length of these two channels would be 89 Kms. The project was conceived as early as 1860 by Alfred Dundas Taylor. The Sethu Samudram Shipping Canal Project (SSCP) was finalised by the previous BJP-led NDA Government at the Centre, and now the UPA Government was ‘merely implementing it.
The project will have to cut across the Adam’s bridge (‘Ram Sethu’) which the Hindus believe was the bridge that Lord Rama built to cross the ocean to reach Lanka. It is therefore regarded as a sacred relic- its destruction considered sacrilege. ]
The government scurried to control damage, going beyond merely its amplified re-writing of the affidavit. Hearings have been put off by the Supreme Court until January 2008; two middle-ranking officials of the Archaeological Survey of India (ASI) were suspended; Culture Minister Ambika Soni offered supreme sacrifice; the Congress sounded, for a few days, like it was a bhajan mandali. “Ram is etched in the hearts and memories of all Indians, there is no denying his existence”, and such. The Law Minister HR Bhardwaj summoned a press conference and sang like a Ram-bhakt, saying, “the existence of Ram cannot be doubted. As the Himalaya is Himalaya, as the Ganga is Ganga, Ram is Ram. Ram is an integral part of our ethos and cannot be alienated from our hearts.”
It would have suited the BJP if the government hadn’t lunged to amend and apolozise. The party spokesman Mukhtar Abbas Naqvi, rebuffing suggestions that the UPA-Congress had retrieved ground in time, knocked the wind out of the BJP’s sails, “We now only have to go and show those colours to the people. How can a party that insults Ram be ruling India?”
Why the BJP thinks it has a flaming issue in its hands? Till just the other day, even the most zealous Hindus in the BJP were ready to admit that Ayodhya had become much a withered weapon, blunted through repeated use. They hadn’t been able to inspire much other than defeat. At the time of the critical 1989 Palampur session of the BJP, where LK Advani pushed the Ayodhya dispute to the national centre -stage, the party had two seats in the Lok Sabha. At Palampur, Advani slung a bow across his shoulders and got onto a rath. Since then, the BJP has either led the Treasury or been in occupation of the Opposition front benches, never anything less.
For them, now there aren’t any other issues anymore; no price rise, no economy, no terror-threat, no nuclear deal; it’s all down to Ram. Whenever there has been a debate on Ram, the BJP has benefited, and whenever they have forgotten Ram, Ram has forgotten them. Now that Ram is with them again, they are looking forward to the prospect of Ram playing out electorally. The BJP is sensing that elections are round the corner.
Indeed, the issue has no doubt been something of a political godsend for the BJP. It has charged up a badly divided and demoralized party and helped it enter the familiar terrain of politics in the name of Ram. The issue gets the BJP going.
Let court decide on Sethusamudram project
Politically, the Ram Setu issue is really about embarrassing the UPA government. BJP strategists say the attack should focus on the wording of the affidavit that questioned the existence of Ram. Their argument simply is: Can you do this with other religions and question their icons or gods? The VHP, on the other hand, is determined to try and prove that the so-called Ram Setu or Adam’s Bridge was man-made and not a natural formation.
THE Central Government has done the right thing in withdrawing the affidavit, the Archaeological Survey of India has filed in the Supreme Court on the Ram Sethu issue. These are matters of faith for which no archaeological or historical evidence is needed. Ram lives in the hearts of millions of people in India, South East Asia and the world over. It is a story ingrained in the minds of people and there is no need for any proof to substantiate it. They do not need any evidence to believe in his virtues that made him the Maryada Purushothama.
Scientific and archaeological evidence suggests that the “Sethu” is a natural formation that occurred over thousands of years. In saying so, there is no need to refute the story of the conquest of Lanka by Ram and his soldiers. That is where the affidavit erred causing needless embarrassment to the government.
Now that the government has made amends on the affidavit, any agitation on this issue is unwarranted. The dredging work to complete the Sethusamudram project is to this region exactly what the Suez Canal was to the whole world. Given the emotional nature of the issue, the BJP will do well to refrain from giving it a political colour in the mistaken belief that it will fetch votes. It should also bear in mind that the Sethusamudram project was initiated when the BJP-led NDA was in office.