Harper defends Petronas decision, vows new investment rules

Prime Minister Stephen Harper today defended his government's handling of the proposed multibillion-dollar takeover of Calgary-based natural gas producer Progress Energy Resources by Malaysian state-owned oil firm Petronas.

NDP says foreign investment review process 'broken'

Prime Minister Stephen Harper defended his government's decision on Petronas's bid for Progress Energy during a news conference with the visiting prime minister of Jamaica on Parliament Hill Monday. (Chris Wattie/Reuters)

Prime Minister Stephen Harper has defended his government’s handling of the proposed multibillion-dollar takeover of Canadian natural gas producer Progress Energy Resources by Malaysian state-owned energy giant Petronas.

Late Friday night, federal Industry Minister Christian Paradis issued a statement announcing the government had rejected the $6-billion bid by Malaysian state-owned oil firm Petronas for Calgary-based Progress.

Paradis "is not at a current time in a position to say that that particular transaction is of net benefit to Canada," Harper said Monday during a media availability with Jamaican Prime Minister Simpson Miller, who is on an official visit to Canada.

"Our view is that foreign investment, generally speaking, is a benefit to the Canadian economy. And, as a general rule, we obviously welcome interest in the Canadian economy," Harper said. "At the same time, we are committed to the Investment Canada Act, which requires us to evaluate whether individual transactions are in the net benefit of Canada."

Decision has 'far-reaching ramifications'

Federal New Democrats, however, are calling Canada’s foreign investment review strategy "profoundly broken" and "a mess."

The NDP’s energy and natural resources critic, Peter Julian, held a news conference in Ottawa Monday to denounce the means by which Ottawa reached and announced its decision on Petronas.

"Behind closed doors, just before the stroke of midnight, in the darkness of Ottawa, we have a minister flipping a coin and making a decision that has far-reaching ramifications. This is no way to manage one of the world’s largest economies," Julian said.

Julian said foreign investors and Canadians need to know the review process for buying into Canadian firms is fair, transparent and subject to a clear definition of what sort of investment is in the national interest of Canada. He said that, at the moment, none of that exists.

"What happened last Friday night is actually the opposite of what should happen in a modern public administration where there are clear rules, a clear process and transparency. What we are seeing from this Conservative government is anything but."

In Question Period today, Liberal interim leader Bob Rae added his voice to the chorus of criticism.

"How is Petronas going to tell the government what is of net benefit if the government hasn't told them what is not of net benefit?" Rae asked.

"This whole process is in the dark. It should be transparent."

Harper said Ottawa is working on a new framework for foreign investment that it intends to release "in due course."

"I'm not going to put timetables on that today," he said. "But these things are coming fairly shortly."

Same issues face Nexen bid by CNOOC

The Petronas bid was under scrutiny for what it might say about another potential takeover in the energy sector.

CNOOC, the Chinese state-controlled oil company, wants to buy Calgary-based Nexen. As in the Petronas deal, the Canadian government needs to decide whether the bid is in the national interest.

The industry minister is giving Petronas 30 days to persuade him their bid would benefit Canadians, but is offering no further details, citing confidentiality provisions of the Investment Canada Act.

Progress Energy CEO Michael Culbert said the company "will be working over the next 30 days to determine the nature of the issues and the potential remedies."

"The long-term health of the natural gas industry in Canada and the development of a new [liquefied natural gas] export industry are dependent on international investments," he added.