NWT barge operator MTS to become Crown corporation in 2027

The NWT government says the territory’s barging service is set to become a Crown corporation over the next two years.

In a Wednesday press release, the Department of Infrastructure said it has decided to operate Marine Transportation Services (MTS) as a Crown corporation following a review of the company’s operations and governance by consultants KPMG.

The department said the governance structure of a Crown corporation would enable MTS to better work with federal counterparts and maximize opportunities for collaboration with the private sector.

“MTS has great potential to contribute to the GNWT mandate of a strong and stable NWT economy but must be operated in such a way that it has the flexibility to seize opportunities as they arise – which is exactly what transitioning to a Crown Corporation would allow,” stated infrastructure minister Vince McKay.

“Ultimately, by transitioning to a Crown governance model, MTS could take steps to increase revenues while striving to reduce expenditures and ensuring every public dollar spent serves the needs of residents and communities.”

The department said the initial stage of transitioning MTS to a Crown corporation will involve “extensive administrative processes” including working groups, policy development and operational planning.

The territory expects legislation to create the Crown corporation will come into force on April 1, 2027.

“Residents are unlikely to see any negative impacts on operations nor customer experience throughout the transition period,” the department stated.

How MTS got here

The NWT government has operated the MTS barging service since 2017 after the previous operator, Northern Transportation Company Limited, filed for bankruptcy in late 2016.

MTS provides crucial summer resupply of goods and fuel to communities along the Mackenzie River as well as coastal communities in the western Arctic.

The service has faced challenges in recent years.

Resupply barges destined for Kugluktuk, Cambridge Bay and Paulatuk were cancelled in 2018 over impassable ice. The NWT government later said a bad fuel shipment also caused a delay.

In 2022, a barge to Sachs Harbour was scrapped. The NWT government blamed poor weather, damage to a fuel hose, a late start to the season due to climate change, delayed buoy placement by the Canadian Coast Guard, and flooding in Hay River and Inuvik.

Some barges destined for Tulita and Norman Wells were cancelled in 2023 due to low water levels and wildfire-related evacuations in Hay River, while all barges for those communities were cancelled in 2024 due to record low water levels on the Mackenzie River.

Why a Crown corporation?

MTS currently operates as a revolving fund organization, meaning its funds are recycled and reinvested without any fiscal year limitations.

A Crown corporation, by contrast, is a business entity owned and controlled by the government that is structured like a private company but operates to fulfill public policy objectives.

As far back as 2020, the territorial government had signalled it was interested in turning MTS into a Crown corporation. Some MLAs, meanwhile, had called for MTS to be privatized again.

KPMG’s review analyzed multiple governance models for the service, including several privatization options.

According to the NWT government, the Crown corporation model was found to be preferable as it would provide the territory greater control and certainty over the service, “particularly in light of the turbulent history, uncertain impacts of climate change and context of MTS’s evolution.”

“As the service is critical to many communities, the Crown corporation model appears to be more advantageous despite carrying slightly higher assumed operational costs,” a background document from the NWT government stated.

“The relatively recent bankruptcy of the business in the private sector adds to the instability within the organization and could potentially hinder plans to move operations to a private-sector operator model.”

The territory added that a Crown corporation would allow for the management of operations and assets together in one entity.

Becoming a Crown corporation would offer “the flexibility to evaluate and potentially expand the scope of services,” such as joint ventures, the territory said.

The NWT government said it would also allow the territory to “maintain a certain level of influence over the strategic direction and service delivery mandate, to ensure communities continue to be offered affordable and accessible services.”