Nova Scotia's government is adding $117.7 million in debt to acquire a large tract of private forest land that belonged to Resolute Forest Products Ltd.

The deal announced Monday night will give the province control of 220,000 hectares of woodlands in Nova Scotia's southwestern region, along with a power generation plant, a factory site and the wood fibre inventory of a defunct paper mill.

Resolute Forest Products Ltd. closed the former Bowater-Mersey paper mill near Liverpool in June, throwing about 320 people out of work.

The province says in a news release that it is acquiring the shares of Bowater Mersey for $1 from Resolute and the Washington Post Co. Ltd.

However, with those shares come worker pension and severance liabilities that the province says are estimated to be $118.4 million and which will have to be repaid as the pension is wound up.

Paul Black, director of policy and community planning in the premier's office, also said that the acquisition will add $117.7 million to the province's debt, which is currently about $13.3 billion.

He said that $117.7 million is the fair market value of the woodlands being acquired.

"The Department of Natural Resources has to buy the land as a tangible capital asset purchase, so that's why it just goes straight to the debt," said Black, in explaining the complex transaction.

Premier Darrell Dexter said despite the increase in its debt, the province has acquired a valuable asset.

"This is about securing the future of the forestry sector in southwest Nova Scotia for generations to come," he said in an interview.

"It means that for us we can now be at the forefront of innovation and change in the forestry sector."

Unanswered questions, say opposition

The former mill site will become a research and demonstration centre for biomass energy and forestry, he added.

"That's part of the transformation of the forestry sector," he said.

However, Tory leader Jamie Baillie said the province isn't being clear on how it will be able to use the assets to revive the forestry sector.

"This arrangement leaves many unanswered questions including why is government ownership better than buying and protecting some of the land and ensuring the rest is regulated to its highest and best use," he said.

"That would have been a much cheaper option for taxpayers to get to the same result."

The news release also says the deal includes the province's acquisition of the Brooklyn Power Corp., a 30-megawatt biomass generating facility.

However, the release says the province will sell Brookly Power to Emera Inc. for $25 million.

A report by a panel examining options for southwestern Nova Scotia's economy had recommended the province acquire the lands as part of a broader plan to revive the region's economy.

There had been concerns that if Nova Scotia didn't purchase the land, it would be purchased by foreign interests that would export the wood.

Nova Scotia's struggling forestry industry has seen two other mills close in just over a year.

The former NewPage Port Hawkesbury paper mill in Point Tupper shut down in September 2011. But it resumed operations in October 2012 as Port Hawkesbury Paper — with roughly half the workers it once had — after the province announced a $124.5-million aid package.

Last month, the owners of the Minas Basin Pulp and Power Company mill announced it will shut down in mid-December, affecting 135 workers.