North

Public protected from potential collapse of company part of Stanton Hospital project, says N.W.T. gov't

The government of the Northwest Territories says the hospital project and taxpayers are protected from the financial difficulties facing one of its main contractors.

Carillion Canada recently filed for creditor protection, gov't sure delivery of service won't be affected

The new Stanton Territorial Hospital under construction on Dec. 3, 2017, as seen from across Frame Lake. The government of the Northwest Territories says there's nothing to worry about with the potential collapse of one of its main backers. (Walter Strong/CBC)

The government of the Northwest Territories says there's nothing to worry about when it comes to the collapse of a major backer of the new Stanton Territorial Hospital in Yellowknife, although some uncertainty remains over who may ultimately take care of 30 years worth of laundry, landscaping, food services and other maintenance activity.

Construction of the new Stanton hospital is nearing completion. The Stanton hospital project is a public-private partnership (P3) contracted to the Boreal Health Partnership (BHP) consortium. The build and service project is valued at more than $700 million with $300 million earmarked for hospital construction costs, and $18 million per year paid to BHP to maintain the facility.

According to the Stanton Project Agreement, Carillion Canada is the "material project contractor." Carillion Canada is under creditor protection following the collapse of its parent company, the U.K. based Carillion PLC.

In an email to CBC, Andrew Livingstone, senior communications advisor to cabinet, said "a Carillion entity specific to Stanton" is responsible for 50 per cent of the equity required for the project, but that "this commitment is secured by a bank letter of credit so the recent Carillion events will not affect the availability of BHP equity."

Carillion is also supposed to provide essential services at the hospital for the life of the contract once the hospital opens next year. But even if Carillion were to go bankrupt, the territorial government would be insulated from any financial fallout, the government says.

'Lenders on our side'

Sandy Kalgutkar, deputy secretary to the financial management board says the uncertainty around Carillion is a concern, but not the government's problem.

"It is important to recognize that the issues [with] regards to Carillion is BHP's issue to resolve, it's not the GNWT's [government of the Northwest Territories] issue to resolve," Kalgutkar said.

"It's up to BHP to provide a solution, whether it is Carillion or a different form of Carillion or a different service provider."

Construction is expected to be completed by November, and the hospital opened to the public approximately six months later in 2019.

Kalgutkar says he has confidence in the process, and that the government has allies.

"We also have the lenders on our side," Kalgutkar said.

"The lenders want to make sure that the service commencement date is not at risk because they want to get paid by BHP, so they are actively putting pressure on BHP to resolve the issue."

Kalgutkar says the government now meets with representatives from BHP twice a week to keep tabs on "Carillion's situation" and how it might impact the hospital project, but he does not anticipate the government incurring any additional costs.

Kalgutkar said the original bond holder on the project was the CIBC, but he could not say who the current bond holder is.

Kalgutkar said that so far, the government has contributed approximately $200 million toward construction costs.

Corrections

  • This story has been corrected to reflect the fact that the territorial government has contributed $200 million in construction costs towards the project, not $200,000 as previously reported. We regret the error.
    Feb 05, 2018 12:10 PM CT

With files from Kirsten Murphy

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