Province cuts its LNG tax rate
Posted October 21, 2014 2:01 pm.
This article is more than 5 years old.
VANCOUVER (NEWS1130) – The province has cut its tax rate for Liquefied Natural Gas companies by half.
Originally a seven per cent rate was proposed, that has now been reduced to 3.5 per cent.
Finance Minister Mike de Jong says the new tax structure is competitive and provides the certainty companies need to make final investment decisions in developing LNG plants in BC.
He says the tax includes a reduced rate from what was announced last February in order to accommodate declining LNG prices and increasing construction costs.
OMNI TV Political Analyst Kim Emerson says it’s a little more on par with what other countries are offering for the same product.
“Overall I would have to say that this is a pretty good thing and for the government it’s going in the direction, though certainly not as quickly as they wanted,” explains Emerson.
He says over the life span, it could bring in $8 billion to $9 billion.
“If you take a medium sized LNG facility running two trains, they would be paying about $800-million per annum for the right to liquefy that gas.”
The new tax starts at 1.5 per cent and applies during the start-up phase of LNG developments, while the 3.5 per cent tax kicks in once the plants are in operation and capital investments are deducted.
In the meantime, Fortis BC is starting a $400-million upgrade of its LNG facility in Delta.
Taking a tour of the facility, Premier Christy Clark told the crowd there’s 150 years worth of LNG extraction in Bc’s future.
She also confirmed negotiations continue with Petronas, the Malaysian energy company which, earlier this month, threatened to pull out of BC LNG for 15 years.
“We’re also in negotiations with Shell, we’re in negotiations with Wood Fibre on our project development agreements, aand a number of others as well,” Clark explained.
