P.E.I. pressured to break lobster agreement

The P.E.I. government appears willing to accept the fact thata 2004 contract with Ocean Choice means the province can't do more to helpa struggling fish processing facility at North Lake.

"The agreement is the agreement, and we want to live by the agreement," Development Minister Richard Brown told CBC News Wednesday.

"If these plants go under, they go under."

Under the contract signed by Ocean Choice in 2004 for its purchase of Polar Foods, the government agreed it would not provide financial assistance to any other lobster processor beyond agreements that were already in place.

And that means the North Lake Fish Co-op may be out of luck as it looks for further financial assistance from the province.

One of the few employers at North Lake, the fishermen-owned co-op processes lobster and other fish.A loan to the co-op at the National Bank was guaranteed by the provincefrom May to August for $2.9 million.

Under an arrangement in place since before the Ocean Choice agreement, the government's exposure was to drop to $1.6 million on Aug. 15. But the Liberal government extended the $2.9 million loan guarantee agreement by one month.

That has since run out and the future of the co-op is uncertain. But if the Liberal government provides further assistance, it could forfeit what Ocean Choice paid for Polar Foods: $17.5 million.

Or, the government couldprovide Ocean Choice financial support similar to any it gives North Lake, commensurate with its size.

Brown said the government cannot afford either option.

"We have an agreement with Ocean Choice that was signed by the previous government, that restricts the ability of this government and this administration to do anything," he said.

"If we break the agreement it willcost taxpayers millions and millions of dollars. We have to balance that off against what we can do for companies."

Still, North Lake and other companies have been pressing the Liberals to help. But Browninsists the governmentcannot afford to provide any more assistance to the smaller processors.