FAIRBANKS — The board of directors for Interior Gas Utility has agreed to purchase Fairbanks Natural Gas from the state for more than $58 million.
As part of the deal approved Tuesday, Interior Gas Utility would also get a processing plant in Point Mackenzie and transportation trucks. The state has agreed to provide $125 million in state project financing to help build an expanded natural gas utility system in the region, The Fairbanks Daily News-Miner reported.
If the deal is approved, the Alaska Industrial Development and Export Authority would help fund the buildout of storage, processing and distribution in the Fairbanks and North Pole area for the next decade.
The proposal has been met with some pushback, with concerns raised during a public comment period about the price of Fairbanks Natural Gas. Other concerns addressed whether people would convert to natural gas given the current low cost of heating fuel and wood.
Board member Steve Haagenson acknowledged the issues with the price, but said Interior Gas Utility is getting exceptional terms for state financing on the expansion project.
“There’s been a lot of talk about the pricing … but we got to pick the terms,” he said. “What we have in front of us are very good terms. Most companies would die for a 15-year deferral and a 0.25 percent interest rate.”
Although board member Aaron Lojewski said he thought the state overpaid for Fairbanks Natural Gas, he also recognized the state’s fiscal situation probably wouldn’t allow for a better deal.
“Would we get a better deal if we wait or a worse deal if we wait? It’s probably going to get worse if we wait right now. Given the state’s fiscal environment, I have little hope that we’ll get more subsidized dollars from the state,” Lojewski said.
The agreement has been sent to AIDEA for review and negotiations will continue over the next several weeks. A final decision is expected by March.
“If we had champagne, I would do that but we still have a long way to go,” said Mike Meeks, the chair of the Interior Gas Utility’s board of directors.