Former environment minister applauds premier

Ashley Fitzpatrick
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Lower Churchill worth the work, says CIBC's Jim Prentice

Jim Prentice, senior executive vice-president and vice-chairman of CIBC, speaks Friday at a luncheon for the Newfoundland and Labrador Oil & Gas Industries Association. - Photo by Gary Hebbard/The Telegram

The Lower Churchill is "a game-changing regional energy play" and Premier Kathy Dunderdale has been taking reasonable, appropriate steps to see it forward, a former federal environment minister told members of the Newfoundland and Labrador Oil and Gas Industries Association (NOIA) Friday.

Jim Prentice, now senior executive vice-president and vice-chairman of CIBC, said the Lower Churchill project is one of a collection of multi-billion-dollar natural resource projects being considered within Canada.

"It's fair to say that there is no other G8 country and, in fact, there is no other country in the world that is bringing on mega-projects, infrastructure projects, energy projects on the pace and scale of Canada," he said.

Many of the other infrastructure projects noted by Prentice were hydro projects, including the Conawapa hydro project in Manitoba and the Mattagami hydro project in Ontario.

"The investments that we are speaking about as Canadians are massive. We are talking close to $290 billion - that's billion dollars - in investments over the next 20 years," he said.

"Now, our economists at CIBC - we are vitally interested in this - our economists have analyzed the projects of which I speak and they estimate those projects will generate, in Canada, an additional one million jobs over the next 20 years."

Prentice was in St. John's continuing a series of speaking engagements around the country on Canada's energy mega-project potential.

A former MP for Calgary Centre North, he acted as minister if Industry and, subsequently, minister of Environment in the Harper cabinet. He resigned from his post in 2010 in order to take up his current position at CIBC.

In his address to NOIA members, titled "Nation Building Infrastructure: Why Lower Churchill Matters," he said the size and scope of the work planned for the Lower Churchill dams and associated transmission infrastructure makes it one of the largest projects on tap, with a capital cost estimated at $6.2-billion.

Compare this to the capital cost associated with the Northern Gateway pipeline, at about $5.5 billion.

"I think it's fair to say that (the Lower Churchill) is one of the largest energy infrastructures that has ever been built in Canadian history," he said.

To that, proponent Nalcor Energy has yet to decide whether or not it will move forward on its project plans.

Should it decide to push forward, challenges are still facing the development, Prentice said, including some public opposition and court challenges.

He made note of the report of the provincial Public Utilities Board.

"It was expected by many to serve as the influential judgment on the project and provide the people of Newfoundland and Labrador with clarity but, I think it's fair to say, if anything, it muddied the waters," he said.

"Personally, I am inclined to agree with the comment of former Premier Williams, who described the report as 'baffling,' but I will leave that discussion for another day."

He went on to express his support for Newfoundland and Labrador Premier Kathy Dunderdale in relation to her work on the project, saying she "has charted a wise and entirely reasonable course of action" in assessing the merits of developing Muskrat Falls and the Lower Churchill as a whole.

"I find it difficult to see what else could reasonably be expected of the premier in these circumstances," he said, making note of the premier's commitment to allow a review of up-to-date numbers by Manitoba Hydro International and to a debate in the provincial legislature, now expected to happen this fall.

According to Prentice, the financial risk associated with the project will be worth the long-term benefits.

"Our bank is vitally interested in these issues. That is why I speak about these issues," he told NOIA members.

CIBC currently has no involvement in Lower Churchill project financing.

Following his speech, Prentice took questions from reporters and reiterated his support for Canada's proceeding with large hydro projects.

"It's good for the economy. It will be good for the environment and we need to be working together to make sure that happens," he said.

Prentice had offered a similarly ringing endorsement of the Lower Churchill plans during a presentation in Halifax in September 2011.

Organizations: CIBC, NOIA, Newfoundland and Labrador Oil and Gas Industries Association Nalcor Energy Public Utilities Board Manitoba Hydro International

Geographic location: Canada, Manitoba, Mattagami Ontario St. John's Newfoundland and Labrador Halifax

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Recent comments

  • Maurice E. Adams
    April 30, 2012 - 14:29

    Nalcor reports that the island's peak demand in 2011 was 1,544 MW ---- more than 400 MW below our existing installed NET capacity of 1,958 MW and well below the 1,592 MW peak demand we had way back in 2002.......... So where is the demand? Virtually no change in 10 years. And we should billions in debt (for 50+ years) for power WE DON'T NEED?

    • David
      April 30, 2012 - 15:26

      This project is the dream of politicians with eerily similar Napoleon complexes ---- first, Joey and now, L'il Danny. And they share something else...both are initiatives of maniacally egotistical politicians in pure SPITE of the welfare of Newfoundland, not for the benefit of it.

  • Cold Future
    April 30, 2012 - 10:38

    Another yaysayer from the subsidized rates side of the straits. Those on the subsidizing take or pay side are not so happy about having to pony up the subsidies until 2067 and beyond. It makes us too uncompetetive. Besides we will never get over the big giveaway at the Upper Churchill. At least Joey's dream did not require any take or pay contracts for the captive NL ratepayer. In the end the NL payers will remember the past and shelf this hairbrained scheme to bankrupt and indebt foreever our generations yet unborn.

  • John Smith
    April 29, 2012 - 08:43

    Mr. prentice is just one more in a long line of intelligent, rational people who can easily see the great merits of this project. The finacing for the project will not be through banks like CIBC or Royal, but through bond market agencies on wall street, with names no one would recognize. As i have said before, all I had to hear was the good, competent people at Nalcor telling me we would need the power, and that the muskrat deal was the best option. However, as usual we had to go outside the province to get people we trust to tell us how good the project is. Now we have the navigant report, the first MHI report, now the second MHI report, Mr. Prentice, Mr. Oliver, Mr. Dexter, Mr. Williams, Tom Johnson, Wade Locke, Jack Harris, the late Jack Layton, Dean MacDonald,...and on and on.All these people have staked their reputations on this deal...yet many are quick to dismiss these people, and oppose this great project...yet they can't say why. I will tell you why. Because they hate Danny Williams, they hate the PC party, and they will do anything they can to stymie what we try to accomplish here..This is a very good project, let's get it done!

    • David
      April 29, 2012 - 15:13

      "....The finacing for the project will not be through banks like CIBC or Royal, but through bond market agencies on wall street, with names no one would recognize....." You have been proven to be more utterly ignorant of the topic of Project Finance than you have previously been on every other aspect of 'Muck Rat Fails'. Congratulations...clean sweep.

    • john Smith
      April 29, 2012 - 19:13 if you are so informed why don't you tell us where they are going to get the financing? Do you think they are going to cll up the Royal Bank and gat a loan for 4 billion dollars? Tell us...where do you think the money will come from? historically we have gone to the markets in new york, but hey...maybe you could fill us with your knowledge...LMAO

    • David
      April 30, 2012 - 09:32

      John: What is a 'bond agency'? Would you be referring to a bong RATING agency? Like S&P, Moody's or Fitch's? If so, these companies do not provide financing or issue bonds. They just rate them for a fee. They have nothing whatsoever to do with the act of raising money. That bit is just to correct the drivel you posted.....given that, it's not even conceivable that you might have the first clue about how many steps and what needs to be done to secure ultimate long-term debt financing for this project , and I'm not going to teach you. Suffice it to say: you're a financial dunce, along with being a political toady.

  • Edward
    April 29, 2012 - 03:14

    Mr. Prentice is hitting the nail on the head, this is nation building just like our pipelines, railways, highways and broadcasting networks were nation building. That point was missed sixty years when UC, James Bay, the Nelson River system and northern BC were developed, and it''s being missed now by people like Alison Redford who pay lip service to a national energy strategy but who don't want to talk about electricity. Energy rates in Montreal/Winnipeg/Vancouver are by far the lowest in the country because they are large hydro load centers. And Canada is good at large hydro (and woeful at nuclear). Having said all that, Nalcor has to do a better job of showing that it's got all of the commercial and technical bases covered for LC; neutral consulting partners like Manitoba Hydro can help them with that. And don't let SNC near the work....they are bags of dirt.

  • David
    April 28, 2012 - 10:03

    So, the CIBC....applauding a project that will require several billions in bank financing --- banks which will have no financial risk exposure whatsoever tied to whether it is an economic success or failure (if you didn't know it, governemnt debts are the taxpayers' obligation). endorsement like this is one you can take to the bank!

  • Bren
    April 28, 2012 - 10:00

    I wonder if you and CIBC would be as interested in the Muskrat Falls project in the absence of a federal loan guarantee. I don't think so. For my money, however, I would bet that the Royal Bank will take the lead on this one - just take a look a their Board of Directors. You may have to play second fiddle on this one, Jim, notwithstanding your glowing endorsement.