Newfoundland and Labrador’s finance minister says former MHA Danny Dumaresque — a critic of the proposed Muskrat Falls hydroelectric project — is wrong to say the province will have difficult paying for the project.
Dumaresque told the Telegram and other media that documents filed as part of the board’s review of the project show that Muskrat Falls would not qualify for financing on capital markets because the revenue stream, especially in the first 12 years, would be below the basic requirements of the capital market.
“You go to the bank to get a mortgage and they look at your income and they say, ‘Well, you’ve got to allocate 40 per cent of your income to be able to pay this mortgage. And basically what they’ve done is they’ve looked at the cash flow statement for Muskrat Falls and they’ve said well, you haven’t got enough money here to meet your payments.”
Natural Resources Minister Jerome Kennedy said Tuesday that Dumaresque based his claim on one hypothetical scenario in submission to the board.
And Finance Minister Tom Marshall, speaking to a breakfast meeting of the Institute of Charterted Accountants on Wednesday morning, said the province’s strengthening fiscal position — and the loan guarantee from the federal government — means financing the more than $6-billion project won’t be a problem.
“Danny Dumaresque is wrong in what he said yesterday,” Marshall told the audience. “I’ve been following interest rates since the late ‘60s. They’ve never been this low. Our credit rating from Standard & Poor’s is improved, we’re going to be borrowing with a guarantee from the government of Canada so we’ll borrow at a triple-A rate.”
Marshall also said he has consulted with lenders about financing the project.
“Last year I met with the major banks, those that are in our lending group, even though we haven’t given them any business since 2007. I asked them how they felt about the Muskrat Falls project and funding it,” he said. “Obviously they’re going to wait to see what the final package is, what the actual package is that’s put before them, but one of them said that he wouldn’t be surprised that given the fact that we haven’t borrowed for so long and given the fact that we’ve decreased our net debt and improved our position, he wouldn’t be surprised if our bonds sell out in less than 15 minutes on the Muskrat Falls project.”
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