The provincial government may be overpaying for two major Sea to Sky Corridor public private partnerships (P3), states a report from B.C.'s auditor general.
The $795-million Sea to Sky Highway upgrade and the $76-million Britannia Mine Remediation Project are classified as P3s. In June 2005, the Ministry of Transportation and Infrastructure entered into an agreement with the Sea to Sky Highway Investment Limited Partnership to design, build and finance two-thirds of Highway 99's improvements.
The province's other Sea to Sky P3 sits adjacent to the highway. In 2003, Victoria took ownership of the Britannia Mine site. Two years later, the government entered a P3 with Epcor Britannia Water Inc. to build and operate the Britannia Mine water treatment plant — a plant needed to remediate heavy-metal-contaminated water from the mine.
“In both audits, we found areas where the projects were fully achieving government's goals,” B.C.'s auditor general John Doyle said in a statement. “However, we also found areas for improvement and have made recommendations to address them.”
Two of the recommendations deal with cash. The audit states the Ministry of Transportation and Infrastructure failed to register the province's switch from provincial sales tax (PST) to the harmonized sales tax (HST) in the Sea to Sky Highway Concession Agreement. As a result, since July 2010, the ministry has been paying HST on the PST-inclusive payments for annual highway operations and maintenance costs.
While the ministry argues the financial impacts of the slip-up are minute — that approximately 15 per cent of the province's payments relate to operations and of that, a small portion carries HST — Doyle noted that issue may require further investigation.
“I would like to note that, while the ministry's own assessment of the move from PST to HST states the impact to be minimal, I would be unable to conclude on this without seeing detailed financial analysis,” Doyle said, adding that all B.C.'s P3s should be examined for the same mistake.
As for the Britannia Mine Water Treatment Plant, the Ministry of Forests, Lands and Natural Resource has never conducted independent verifications of Epcor's water quality test results, the auditor general's report stated. That's a process the auditor general expected to see in place.
“Instead, we found that the ministry relies on Epcor's self-reported results,” the report stated.
That presents a risk of overpayments because Epcor is paying according to the volume of water it processes and its ability to meet the water quality requirements, the report states.
Doyle also suggested the ministry set up a long-term plan for site remediation.
“While government is addressing the immediate issue of pollution, it needs to demonstrate how it's going to achieve its long-term goal of site closure,” he said.
Within the year, the auditor general's office plans to follow up on the ministries' progress in implementing its recommendations.