Manitoba's Conservative government is embarking on a Soviet-style nationalization of the natural gas industry by letting Manitoba Hydro, a Crown corporation, acquire Centra Gas from Vancouver's Westcoast Energy later this month. The deal will let Manitoba Hydro absorb a utility that dominates both gas distribution and the industry's retail end, forming a virtual public-sector monopoly over gas and electricity distribution.

It's back to the future for the energy industry. In 1987, Gary Filmon, the Opposition leader, rightly fought the NDP government's proposal to nationalize gas distribution. Criticizing the NDP for using Crown corporations "as an instrument of public policy," Mr. Filmon feared that the NDP would press the corporation to service uneconomical areas of rural Manitoba with natural gas lines. "We will all pay more in the long run," he warned, predicting that the cost of extending gas services to rural Manitoba would be borne by all taxpayers but enjoyed by few.

What a difference 12 years makes. Relying heavily on provincial grants, the Conservative government has already begun to extend gas services to rural Manitoba, specifically the Interlake region between Lakes Winnipeg and Manitoba. After nationalization, "gasification" of rural Manitoba can move swiftly, without hindrance and foot-dragging from a private utility.

Mr. Filmon was also right in 1987 to counter the NDP claim that nationalization would prevent the private-sector gas utility from reaping too much profit. "Why aren't other governments moving in on this and rushing to take over natural gas distribution?" he said. "There's no bonanza here to be tapped, no wealth of profit."

Howard Pawley's NDP government put a $175-million price tag on the private utility, Inter-City Gas. Mr. Filmon warned that the province would forfeit millions in tax revenue while taxpayers would incur more debt, eroding any profits. "So what we're doing is essentially washing out the difference. There's absolutely no saving."

The deal failed, and for good reason. Then, as today, the price of gas, including the private utility's profits, are regulated by the government-appointed Public Utilities Board. When a government player is regulated by its own agency, a clear conflict of interest results.

Acquiring the shares of Centra Gas ($245-million), its debt ($190-million), and the one-time tax payment on assets ($90-million) amounts to an extra $525-million debt burden. Manitoba Hydro will obtain a utility that posts a $12-million return to shareholders, a modest $1-million in profit for every $20-million paid by Manitoba taxpayers. After the utility's purchase, Hydro's net debt would increase to $5.5-billion. Every single Manitoban currently owns $5,200 in debt for Hydro and another $6,049 of the province's debt.

The benefits of nationalization are practically nil. Unique private-sector costs passed on to the consumer by Centra Gas in 1998 were $24-million. Under public ownership, approximately $23-million in debt-servicing costs could be passed on to Manitobans, even after factoring in a purported $12-million in savings from streamlining the utility.

As usual, taxpayers will pay for political meddling in private business, as happened in the 1980s, when the government's Manitoba Telephone System lost millions on risky overseas investments, and when its public insurance corporation lost a fortune in equally risky reinsurance schemes.

In contrast, when Centra Gas lost $45-million hedging commodities last year, the PUB shielded ratepayers by forcing Centra shareholders to take the lion's share of the hit.

In the late 1990s, thanks to competition and high technological investment, governments the world over are deregulating. A public-sector gas utility in Manitoba stands the same odds of long-term survival as a prairie dog in a buffalo stampede.

The Manitoba government should recognize the folly in nationalizing any business. In the past, competition between electricity and gas distributors lowered rates for power consumers. With both gas and electricity under the same public ownership, consumers will be at the mercy of the Public Utilities Board to control rates.

Gary Filmon rightly demanded a full public inquiry in 1987 before risking millions of dollars. "Madam Speaker, if this is a good deal, then it ought to be reviewed by a totally independent inquiry . . . that objectively puts forward the pros and cons . . . and above all, the financial impacts on Manitobans."

Fast forward 12 years and it is the Manitoba Tories who are rushing pell mell into the murky waters of state monopolies without any public review. The government requires no legislative amendments for Manitoba Hydro to acquire Centra gas.

The Canadian Taxpayers Federation recently petitioned the Public Utilities Board to exercise its authority and hold public hearings before consummating the sale. A decision is pending.

The latest announcement to buy out Centra Gas comes only a few months before Manitobans are expected to go to the polls. What was considered in 1987 an NDP "vote-getting measure" that "only a government committed to socialist ideology" could like is today touted as a financially sound decision and a "natural fit" for the Tories.

In 1987 Mr. Filmon asked, "how can we have any confidence that things are going to be different when the gas company is under public control?" Manitoba taxpayers today might well wonder.