Troubled Bas-Caraquet shipyard bailout could hit $15M

The Gallant government says it's close to a decision on bailing out a troubled shipyard in northeast New Brunswick, but the cost could be several million dollars higher than expected.

"We are very close to a decision" on the New Brunswick Naval Centre in Bas–Caraquet, Victor Boudreau, the minister for the Regional Development Corp., said on Tuesday.

But Boudreau said during the government's review of the file, it discovered the final tab for the already heavily subsidized facility will be higher than forecast.

"We've come to realize it's going to be closer to a $15 million project than a $10 million project," he said.

And he wouldn't rule out the possibility that the entire cost will be borne by federal and provincial taxpayers.

"We're looking at our options," he said.

Site shutdown

In December, Quebec–based Groupe Océan shut down work at the site, where it had 28 people employed at the time.

About half of them accepted jobs with the company outside the province, while the others opted to stay put and wait for work to resume.

The company plans to build a floating dry dock at the centre over the next five years, eventually employing 77 people. The project has been touted as a big boost to the economy in northeast New Brunswick.

Earlier last fall, Groupe Océan joined several local contractors by filing a lien against the naval centre over unpaid bills for workers' time and materials.

Groupe Océan says it's encouraged that the province appears poised to step in soon.

"It's positive news for us, certainly," said spokesperson Philippe Fillion.

"We'll wait to see what the announcement is."

Fillion says the company still hasn't been paid the $717,000 it is owed by the naval centre, a government–subsidized shipyard on the Acadian Peninsula.

Financial guarantees needed

The Regional Development Corp. committed $4 million in infrastructure funding to the project, but stopped payments at $1.5 million because the centre couldn't convince banks to lend it $4 million in matching funds.

The other $2 million came from the federal government.

[We're] trying to determine how we ended up in this situation.- RDC Minister Victor Boudreau

The centre has said banks and other lenders wouldn't advance the money without financial guarantees from the two municipalities who helped create the centre, the town of Caraquet and the village of Bas-Caraquet.

The municipalities can't guarantee that amount.

Boudreau says it's "a valid point" that the centre's inability to borrow money ought to have been expected.

"It's something we've been looking at, trying to determine how we ended up in this situation," Boudreau said.

He said the structure of the funding arrangement was established in a memorandum of understanding signed by the previous Progressive Conservative government just weeks before the 2014 election.

"Did that have a role to play in this? We're trying to get answers to all these questions," he said.

Boudreau pointed out a company making lobster boats at the shipyard is doing well. He said that shows it's too soon to write off the facility.

"There is potential in this site," he said.

Opportunities New Brunswick, the provincial job creation agency, is also set to provide Groupe Océan an additional $3.8 million in payroll rebates for the anticipated 77 jobs. None of that money has been handed over.

In December, Opposition Progressive Conservative leader Bruce Fitch said his party wouldn't necessarily oppose additional government funding to save the shipyard, "if there's a business case" for it.