Saskatchewan Oil, Potash Revenue Brings Surplus
Source: Reuters, Rod Nickel (3/23/11)
"Saskatchewan cuts debt, collects oil and potash revenue while most provinces are running deficits."
The budget presented by Premier Brad Wall's Saskatchewan Party government on Wednesday assumes revenue of CAD$10.79B for the 2011-12 fiscal year, which begins April 1, up 8.5% from last year.
Spending is expected to rise 5.5% from a year earlier to C$10.67 billion, with more money going to health care and highway construction.
The western province of 1 million people is a major producer of the crop nutrient potash, as well as uranium, grain and oil.
"Both the national economy and global markets for our commodities are making real strides in recovering from the downturn of a year ago, both of which spell greater prosperity for our citizens in the months ahead," said Finance Minister Ken Krawetz. "In that regard, we are a different place from most other provinces in Canada."
Saskatchewan expects to see healthy increases in royalties from both crude oil and potash production.
Demand for potash and other fertilizers has grown as grain prices have surged due to shortages, while crude oil has moved past $105 a barrel in New York as tensions in North Africa and the Middle East raise supply fears.
Potash prices are seen rising to nearly $391 per ton of raw production in 2011. Sales look to rise 7% to 10.3 million tons of the fertilizer content within the raw production, the government said.
Saskatchewan will use its commodities windfall to post the CAD$115M budget surplus—up from CAD$40M for the current 2010-11 year—while it trims its general debt by C$325M to CAD$3.8B, the lowest level in 24 years.