Councillors here plan a bit of a gamble with the American dollar in the hope of saving big bucks constructing Mount Forest’s sewage treatment plant.
Wellington North will be purchasing $660,000 in American funds and deposit them until required to purchase equipment to be installed in the new plant.
A report from Treasurer John Jeffrey stated that prior to completing the design of the new sewage treatment plant and issuing the contract for its construction, council pre-approved the purchase of certain pieces of equipment to be incorporated into the plant.
In some cases, the bids contained prices for the equipment for the plant that were in US dollars, and are therefore subject to fluctuations in the currency.
In the past few months, the Canadian dollar has risen and the American dollar dropped in value. Changes to the American dollar will directly affect the overall cost of the project.
Jeffrey noted that Wellington Construction will not actually be purchasing the equipment until summer 2008, when it is to be installed.
“However recently the value of the US dollar relative to the Canadian dollar has increased – making the purchase of the equipment less expensive than quoted in the contract.”
The concern is that the American dollar value may increase again by the summer. As a result, Jeffrey suggested the township purchase U.S. dollars now and hold them until the purchase is made next summer.
His recommendation was that the township should purchase $660,000 and given the current exchange rate, the savings would be about $100,000.
Mayor Mike Broomhead added that $100,000 is an estimated potential savings.
As of last week’s dollar value, he suggested actual savings could be $102,000.
