Global financial crisis delays Iqaluit hydro dam project

Unstable financial markets and slumping oil prices have forced Qulliq Energy Corp. to delay its plans to build a hydroelectric dam near Iqaluit.

Officials with the Nunavut utility say the five megawatt dam, to be built at Jaynes Inslet outside of the city, will likely start up two or three years past the original start-up date of 2013.

"Everything, as you can probably realize, has changed radically since the end of last year," Bruce Rigby, Qulliq's acting president, told CBC News.

Rigby said lower oil prices having moved from $140 US a barrel last year to tradingaround $50 today have slowed down Nunavut's rush to move away from crude as its main energy source.

"The change in oil prices at the moment allows us some space to actually get the project ready," he said.

"Nothing is going back to be redone or anything. It's just simply a matter of taking the time that we've given to retool the project in such a way that it meets the new financial conditions that we're dealing with."

Qulliq was originally going to find private investors to back the dam project, which could cost upwards of $200 million. But Rigby said Qulliq has had to change its plans in light of the ongoing international credit crunch.

"That's no longer really on the table," he said.

The shift away from seeking private investment could mean more public money may be needed for the Iqaluit dam. On that matter, Hunter Tootoo, the minister responsible for Qulliq, said nothing has been decided.

"If at some point down the road, that there's a decision that that has to be paid for by the government, then that's something that would be looked at at that time," Tootoo said.

Regardless of whether the dam becomes a taxpayer-funded project or not, Tootoo said the idea of burning less oil to generate energy is a popular idea among his constituents in Iqaluit Centre.

Water surveys at the Jaynes Inlet site will continue this summer, Qulliq officials say.

Qulliq's hydro committee had originally proposed building the dam at its Armshow Long site on the Armshow River, but in July changed its mind and decided on the Jaynes Inlet site.