Plan Nord: Québec Liberal Government Relaunches the Plan Nord

On June 4, 2014, the first budget (Budget) of the new Liberal government, in power since April 7, 2014, was tabled in the Québec National Assembly. The Budget provides for certain measures to relaunch the Plan Nord, as announced by the Liberals during the latest election campaign.

The Plan Nord as originally proposed by the Liberals in 2011 included major investments totalling more than $80 billion over 25 years. Renamed "The North for All" by the Parti Québécois following its election, the project was marked by uncertainty and a significant reduction in investment, partly due to the stormy reform of the Québec Mining Act.

The budget of the Northern Plan Fund (the Fund) allocated to the Plan Nord consists of $63 million for the 2014–2015 year and could reach up to $2 billion by 2035. The Fund will be partially financed by the reinvestment of direct and indirect tax benefits resulting from economic activity triggered north of the 49th parallel.

The Budget provides for the establishment of a ministerial committee (Comité ministériel du Plan Nord, or Committee) comprising 14 ministers and chaired by the Minister of Energy and Natural Resources, who is the minister responsible for the Plan Nord. The Committee's mission will be to establish the government’s strategy and policies with respect to the development of Northern Québec. The Committee will also be responsible for the creation and organization of the Société du Plan Nord (the Société), which will replace the Secrétariat au Plan Nord created by the former government.

The Société’s role will be to coordinate government action while taking into consideration all stakeholders, but also to “open up the territory” in order to foster Northern Québec’s economic development. For example, the Société will have a marketing office that will, in partnership with Investissement Québec, identify and communicate the equipment and supply needs of prime contractors in order to encourage the involvement of Québec’s businesses in Northern development.

The new Plan Nord also includes the following:

  • Natural Gas – Establishing an interministerial committee to ensure the fast supply of natural gas and liquefied natural gas to businesses located in the Côte-Nord region. The government desires to promote service by sea and land rather than the construction of a pipeline. The Budget also implies that the review process by the Bureau d’audiences publiques sur l’environnement (BAPE) could be accelerated.
  • Infrastructure – Constructing road infrastructure in the Plan Nord territory.
  • Indigenous Peoples – Providing educational and professional training for First Nations ($100 million).
  • Transport by Rail – Conducting a study to identify the optimal rail corridor between Sept-Îles and the Labrador Trough. The government will survey the interest of private partners to participate in the study and a joint venture to carry it out (up to $20 million).
  • Research – Funding a research centre in Northern development, in collaboration with Laval University.
  • Tourism – Establishing a tourism strategy for region north of the 49th parallel.

Confirmed Investments

Alongside these measures, the Budget confirmed two important investments:

  • Hydro-Québec will invest $1.1 billion in the transmission line between the Chamouchouane substation in the Saguenay region and the Bout-de-l’Île substation in the Montréal area. Most of the investment will be made between 2016 and 2018.
  • The creation of Capital Mines Hydrocarbures (CMH), an investment fund of $1 billion, whose mission will be to acquire equity interests in the development of non-renewable natural resources; 50% of the fund will be invested in projects located in the Plan Nord region, with the other 50% going to projects across Québec. CMH will be managed by Ressources Québec, a subsidiary of Investissement Québec, according to an investment policy to be established by the collaboration of the Minister of Finance; the Minister of the Economy, Innovation and Exports; and the Minister of Energy and Natural Resources. This amount from the fund adds up to Ressources Québec’s authorized capital of $250 million, raising the total allocation for investments in the non-renewable natural resource sector to $1.25 billion.

Mining Royalties

The Liberal government decided to maintain the entire mining royalty regime established by the Parti Québécois government in order to preserve stable and predictable rules for the mining sector. For more information on the mining royalty regime, we invite you to consult our Osler Update dated December 16, 2013.  

Conclusion

The key concepts of the Plan Nord as envisaged in its initial unveiling in 2011 have reappeared in the Budget: the reinstatement of the Société du Plan Nord, the Northern Fund Plan and the increased investments in infrastructure and research and development. However, the measures are not on par with those initially proposed in 2011. Moreover, a number of these measures are continuations from the previous government: the preservation of the mining royalty regime adopted on December 10, 2013, the investment by Hydro-Québec and the direct involvement of the state in non-renewable energy through the Capital Mines Hydrocarbures investment fund.

In the coming months, the government will unveil the details of its direction and plan as well as the governance structure of the Plan Nord.

 

 

Topics:  Canada, Economic Development, Federal Budget, Infrastructure, Public Transit

Published In: Elections & Politics Updates, Energy & Utilities Updates, Environmental Updates, Finance & Banking Updates, Transportation Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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