Province made bid for Star Lake

Terry Roberts
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Energy

Premier Danny Williams admitted Friday that the province's energy corporation, Nalcor, attempted to buy AbitibiBowater's ownership share of the Star Lake hydroelectric generating station last year.

AbitibiBowater, owner of the recently shuttered newsprint mill in Grand Falls-Windsor, is a partner in the 18-megawatt Star Lake project with Enel North America, whose Canadian subsidiary is CHI Canada.

Premier Danny Williams admitted Friday that the province's energy corporation, Nalcor, attempted to buy AbitibiBowater's ownership share of the Star Lake hydroelectric generating station last year.

AbitibiBowater, owner of the recently shuttered newsprint mill in Grand Falls-Windsor, is a partner in the 18-megawatt Star Lake project with Enel North America, whose Canadian subsidiary is CHI Canada.

The station was commissioned in 1998 at a cost of $51 million, and sells power to the provincial grid through a long-term contract with Newfoundland and Labrador Hydro, a division of Nalcor.

David Paterson, president and CEO of AbitibiBowater, confirmed recently during an interview on the Business News Network that the province was a low bidder.

Williams would not provide details of the bidding process, but said Nalcor stepped in with the intention of bringing provincial ownership of the resource.

"That never happened, but it gave us a clear indication that Abitibi was in the process of trying to dispose of their assets," Williams said.

In response to AbitibiBowater's decision to close the mill, the provincial legislature unanimously passed an expropriation bill in December, seizing the company's hydroelectric assets, including Star Lake, and repatriating timber and water rights and leases.

The company has called the expropriation illegal and is preparing to challenge the legislation under the North American Free Trade Agreement (NAFTA).

Liberal Leader Yvonne Jones said she learned of Nalcor's attempts to buy the Star Lake station during a visit this week to central Newfoundland.

She questioned why the government didn't disclose this information during the expropriation debate. She also wonders why the government didn't make a counter-offer, and the amount of Nalcor's bid.

Jones said it's her understanding that AbitibiBowater was preparing to accept the winning bid for Star Lake when the province swooped in and expropriated all the company's assets, except the mill in Grand Falls-Windsor.

"When we were dealing with this on the floor of the House of Assembly, I wasn't aware there was any competitive bidding that had went on," she said.

Jones said this information would not have changed her vote on the expropriation bill, but she believes the government should have made a more determined effort to secure the ownership stake through the bidding process.

She said this may have avoided the need for expropriation, and the uncertainty of a NAFTA challenge.

troberts@thetelegram.com

Organizations: AbitibiBowater, CHI Canada, Newfoundland and Labrador Hydro Division of Nalcor NAFTA Business News Network

Geographic location: Star Lake, Grand Falls-Windsor, Abitibi Newfoundland

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Comments

Comments

Recent comments

  • Graham
    July 02, 2010 - 13:24

    What else have you so conveniently forgotten to tell us Danny? Will the lies and cover ups ever end? See you on the Hill March 13th.

  • Bones
    July 02, 2010 - 13:23

    Graham: If the province wanted it, and always gets what it wants, why would it bid low? I would like to take this opportunity to make a sensible, rational suggestion that any open minded person would be forced to consider......AB's secretive, corporate strategy (in the best interests of the shareholders, of course) was not something government was allowed to see. Suspecting the Star Lake asset had a for sale sign on it, government placed a bid (bidding low, of course, so as not to actually purchase the asset, but to determine if the asset was actually for sale). With the determination made that AB was attempting to sell an asset that depended completely on the resources of the region, what course of action would you take? Jones, herself, said it would not have affected her vote on the expropriation. Clever move if you ask me, but you didn't, lol, I know.

  • Frank
    July 02, 2010 - 13:20

    Yvonne Jones is so out of touch on this story it makes one smile.

    Graham I think you have nailed it.

    Danny wants the hydro.. nothing more. Grand Falls is not in his plan. The fibre will go to Corner Brook ( his district) and the workers who were looking for a mediator to help them negotiate a restructuring agreement at the mill will now be left holding the bag. As for you Bones the govt is not that smart re/ Star Lake. Danny and Ed Byrne have had a bee in the pants over Abitibi for quite some time now. Keep on aclose eye on who will benefit from the demise of the paper business in Central.

    Who has a brother working for Kruger ?

  • Graham
    July 01, 2010 - 20:09

    What else have you so conveniently forgotten to tell us Danny? Will the lies and cover ups ever end? See you on the Hill March 13th.

  • Bones
    July 01, 2010 - 20:09

    Graham: If the province wanted it, and always gets what it wants, why would it bid low? I would like to take this opportunity to make a sensible, rational suggestion that any open minded person would be forced to consider......AB's secretive, corporate strategy (in the best interests of the shareholders, of course) was not something government was allowed to see. Suspecting the Star Lake asset had a for sale sign on it, government placed a bid (bidding low, of course, so as not to actually purchase the asset, but to determine if the asset was actually for sale). With the determination made that AB was attempting to sell an asset that depended completely on the resources of the region, what course of action would you take? Jones, herself, said it would not have affected her vote on the expropriation. Clever move if you ask me, but you didn't, lol, I know.

  • Frank
    July 01, 2010 - 20:03

    Yvonne Jones is so out of touch on this story it makes one smile.

    Graham I think you have nailed it.

    Danny wants the hydro.. nothing more. Grand Falls is not in his plan. The fibre will go to Corner Brook ( his district) and the workers who were looking for a mediator to help them negotiate a restructuring agreement at the mill will now be left holding the bag. As for you Bones the govt is not that smart re/ Star Lake. Danny and Ed Byrne have had a bee in the pants over Abitibi for quite some time now. Keep on aclose eye on who will benefit from the demise of the paper business in Central.

    Who has a brother working for Kruger ?