Grays Bay project dealt huge blow as federal funding denied

Grays Bay project dealt huge blow as federal funding denied

The Nunavut government has pulled its resources out of the Grays Bay Road and Port Project, after its request for federal funding to cover three-quarters of the estimated $527-million price tag was denied by Ottawa last week.

The proposed project is a 227-kilometre all-season road to connect a proposed deep-water port at Grays Bay — on the Northwest Passage between Bathurst Inlet and Kugluktuk — to the winter road that services the N.W.T.'s diamond mines. It's one of Nunavut and Northwest Territories' richest areas in minerals.

The project has the potential to create 2,250 full-time equivalent jobs in Nunavut and contribute $665 million to the territory's mining operation revenues, according to a January 2018 economic assessment report.

Project didn't fit scope of funding pool, minister says

Nunavut's Economic Development and Transportation Minister Joe Savikataaq said the government didn't get a reason why the funding was denied, other than it didn't fit the scope of the parameters of the funding pool.

The government was seeking money from Transport Canada's National Trade Corridors Fund — a $2 billion pool of money over 11 years, of which $400 million was set aside for trade and transportation infrastructure in the territories.

"It's the [federal government's] funding and that's the explanation we got. It didn't fit into the scope of what they think this funding should be used for," said Savikataaq.

"It doesn't really matter if I agree or not. It's their program, it's their money, it's their assessment."

In a statement to CBC News, Transport Canada was tight-lipped about why the project wasn't approved, citing privacy laws.

"The department assessed the Grays Bay Road and Port Project against the fund's objectives, conditions and merit criteria, and based on Transport Canada's assessment the project was not selected," reads the statement.

Government has spend $3.2 million on project to date

Savikataaq said the Nunavut government had put in $3.2 million on the project to this point — $2 million of which was for environmental and engineering-related studies ahead of submitting the project proposal through Nunavut's regulatory process.

"In order for any project to move forward you have to spend money on it," he said.

"[It] seems like a lot of money, but the total cost of the project was $435 million [the aforementioned economic assessment report pegged the cost at $527 million]. So if you do the math, it's not a huge amount compared to the total cost of the project that was spent."

Project not necessarily dead

With the news of federal funding being denied, the territorial government is again stepping away from the project and leaving the Kitikmeot Inuit Association to pursue funding for it on its own.

Back in 2016, the Nunavut government and Kitikmeot association signed a memorandum of understanding to partner on the project to secure funding.

"We wish them the best but we have so many other pressing issues that we have to deal with," said Savikataaq.

The Kitikmeot Inuit Association declined CBC's request for an interview, saying it intends to release a statement on Monday in response to the announcement.