FREDERICTON – Progressive Conservative Leader David Alward is not backing down from his stance that he would consider nationalizing the province’s energy system if the deal to sell most of NB Power’s assets to Hydro-Québec goes through and he becomes premier next September, a move one observer said could cause a chilling effect on investment in New Brunswick.

“Anytime a politician utters the word nationalization it is perceived as a threat,” said Charles Cirtwill, president and CEO of the Atlantic Institute for Market Studies, a Halifax-based public policy think-tank.

“Just ask anybody who was going to invest in Newfoundland in the last two years what the nationalization of Abitibi did,” he said. “It threw a cold wet blanket over the idea of investing in anything.”

Alward continued to face fierce criticism Friday for comments this week that he would consider nationalizing New Brunswick’s energy system, a move critics say would add to NB Power’s debt and scare investors.

Although the Tory leader clarified that nationalization would be a last resort option only, he said “the reality is that one of the options is expropriation of the land that was given up in this deal – or of the assets given up in this deal to Hydro-Québec.”

Newfoundland and Labrador Premier Danny Williams expropriated the assets of the AbitibiBowater paper mill – including its timber rights and hydroelectric facilities – in December 2008.

“In Newfoundland there were so many proven opportunities that people wanted to invest there anyway,” Cirtwill said. “But when you look at New Brunswick you’re not sitting as Danny was on a huge proven oil reserve.

“New Brunswick is really trying to attract investment. This is not the kind of message you want to be sending.”

Gordon Weil, president of Standard Energy in Maine, said he doubts re-nationalizing assets acquired by Hydro-Québec would affect the investment climate.

“I think in this case if it were done it would be such a one-off deal, so clearly a special circumstance,” he said, “that I doubt investors would expect they have to worry about the government of New Brunswick getting into the business of expropriating property.”

Weil said unlike in Venezuela – where the nationalization of assets has driven investors out of the South American country – in New Brunswick it would be regarded as a special case and not a sign of things to come.

However, Cirtwill said for people who think nationalization isn’t necessarily a bad idea, “the big question is what comes next.

“I think the Liberal speculation around expropriation of wind farms is probably a little bit of a reach but you know what, maybe all of a sudden the Irving Oil refinery is attractive for nationalization,” Cirtwill said.

Premier Shawn Graham accused Alward this week of scheming to take over privately-owned power facilities in the province, including the municipal utilities in Saint John, Edmundston, and Perth-Andover and privately-owned wind farms.

He also drew comparisons between the Progressive Conservative leader and the controversial Venezuelan President Hugo Chavez.

The South American president has nationalized telecommunication firms and power utilities in Venezuela, scaring investors into dumping Venezuelan assets and devaluing the Caracas stock exchange.

Graham said during question period Friday that nationalization “is like hanging a neon sign on New Brunswick that says to the private investor: Don’t invest here.”

Alward told reporters outside the legislature Friday that his comments were “specifically tied to the sale of NB Power to Hydro-Québec because the people have been very clear and this government does not have a mandate to sell the public utility.”

“What I’ve said from square one is we would do everything reasonable to stop the sale number one, or tear up the deal afterwards,” Alward said. “Certainly there are other options in terms of negotiations, discussions and legal action before we would even consider nationalization.”