N.W.T. pays $28M extra in cost overruns for Mackenzie Valley Fibre Link

The N.W.T. government is paying an additional $28 million for the Mackenzie Valley Fibre Link, a project that was completed in 2017.

The project was initially estimated to cost around $81 million, but ended up at $194 million in total. The Mackenzie Valley Fibre Link was a private-public partnership, or a P3, between the N.W.T. government and the Northern Lights General Partnership (Northwestel and Ledcor, a construction company). 

Caroline Wawzonek, the N.W.T. finance minister, said in the legislature in late March that the project cost more than expected, which was originally covered by the private partners. But those extra expenses incurred by the private partners led to the territory paying a settlement. 

Todd Sasaki, a spokesperson for the Department of Finance, said in an email the cost of $27.75 million is a "settlement of litigation related to additional costs incurred by our P3 partner to construct the [Mackenzie Valley Fibre Link]."

According to Wawzonek, under the agreement, partners have the ability to seek compensation for a "supervening event," which is an event they claim would have increased the associated costs of the project. The partners did seek compensation and the territory entered into discussions to avoid going through a formalized process.

This involved a mediator and it was determined in this process that the N.W.T. should pay the approximate $28 million to Ledcor.

This pushed the territory's contribution to the project to $109 million. 

'Unexpected, unanticipated conclusions'

Kevin O'Reilly, Frame Lake MLA, flagged the amount in the Legislative Assembly in late March as MLAs voted on the infrastructure spending. 

"I think part of the problem ... is that this was done as a P3, and P3s lead to these kind of unexpected, unanticipated conclusions," he said.

O'Reilly voted against the bill because of these added expenses, but it did pass.

Frieda Martselos was one of those who voted in favour, although she acknowledged it was unfortunate.

"They inherited this with another government. And, you know, governments have to inherit bad files sometimes," she said in the legislature.

'Would never be another opportunity'

Michael Miltenberger is the former N.W.T. finance minister who signed the initial agreement for the Mackenzie Valley Fibre Link in 2014.

He said even with the extra costs, the project is significantly cheaper than it would've been had it been built now. 

"It ended up costing about $100 million. If you want to put that line in today, it would cost you probably double or triple that," he said. 

Miltenberger said there were cheaper alternatives at the time, but the point of the project was to get service to the remote communities. 

"We could have just done it over into the Yukon for probably half the half the price, but ... There would never be another opportunity to put a cable all the way down the valley," Miltenberger said. 

For Cecilia Tobac of Fort Good Hope, N.W.T., the fibre link means her home has faster internet speeds. 

"It's good, it hasn't given me any problems," she said. 

Tobac said she got her home connected as soon as it became available. 

A decade ago, internet service of that kind was unlikely in small remote communities like Fort Good Hope, but the fibre link made it a reality. 

But now there is competition, including Starlink satellite internet which is operated by Elon Musk's spacecraft and rocket launch company, SpaceX.