First Nations encouraged to get into energy business 

Aboriginal Energy Partnership receives $3 million in federal funding

The federal government is offering millions of dollars to stimulate aboriginal involvement in B.C.'s run-of-river energy hydro projects.

Indian and Northern Affairs Minister Chuck Strahl announced May 19 that the federal government is contributing $3 million to the First Nation Regeneration Fund as part of the Aboriginal Energy Partnership.

The partnership is an effort between non-profit organization EcoTrust Canada and two aboriginal capital corporations: Tale'awtxw Aboriginal Capital Corporation and Tribal Resources Investment Corporation (TRIC). The partnership is the first of its kind in B.C., according to Ecotrust.

The fund is an effort to "regenerate Aboriginal economies" by helping them purchase equity stakes in run-of-river projects, according to a news release from Ecotrust Canada. Tale'awtxw and TRIC will each donate $2 million to the fund, with the Government of Canada contributing the balance.

"Our Government is committed to encouraging Aboriginal participation in resource and energy projects across Canada," Strahl said in a news release. "Through this unique approach, we are maximizing the benefits of our investment in Aboriginal economic development by leveraging capital from the private sector and other partners."

It works like this: many run-of-river projects are located on the traditional territories of First Nations in remote areas. The Toba Montrose project, for example, is located in the remote territory of the Klahoose First Nation, as are numerous projects on In-SHUCK-ch Nation territory.

Ecotrust Canada will manage the fund and First Nations will be able to apply for funding up to $2 million, according to Sandy Wong, general manager of Tale'awtxw Aboriginal Capital Corporation.

"We're fairly restricted to smaller scale types of projects," he said in an interview. "We're still trying to get some more money into the fund right now and there's a good possibility that we will, so we're proceeding with our original concept which is projects anywhere from $1 million to $2 million."

First Nations will use the funds to buy pieces of the projects, according to Wong. He said an independent power producer develops the project with 80 per cent of financing by outside sources such as insurance companies. The developer then puts in 20 per cent of the remaining equity that "turns into cash," as Wong tells it.

Wong added that every developer must consult with First Nations and they usually do it in two ways.

"They give the First Nation an opportunity to purchase an equity stake in the project or they work out some sort of benefit agreement where there might be something like royalty payments or whatever else the First Nation can negotiate," Wong said.

"What we're saying is that... it's best for the First Nations to purchase a 10 per cent equity stake on the front end of the deal."

First Nations could apply for the funding and thereafter contribute 10 per cent of the capital required to develop the project. They could, in turn, own 50 per cent of the project, according to Wong.

"It works out to be much more attractive for the First Nation because they get the benefit of 50 per cent of the project, as opposed to something like a royalty payment," he said.

Gerard Peters, head negotiator for the In-SHUCK-ch Nation, said he's passed the information about the First Nation Regeneration Fund on to his staff and awaits their word on whether to proceed with funding applications.

"This is something that we absolutely must get on with," he said in an interview. "What it does quite basically is allow equity to be purchased in projects, which means of course you get some funding. I'm not sure how you access it quite yet, and that allows you to purchase equity in various projects."

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