It was one of the largest line items in this year’s provincial budget — a massive $664-million allocation to Nalcor.
Speaking with The Telegram Friday afternoon, Natural Resources Minister Jerome Kennedy explained the vast majority of that money will sit in an account, unspent, until the government decides whether to sanction the Muskrat Falls project.
And while the budget allocation hasn’t received a lot of attention — a sum which represents roughly nine per cent of the total provincial budget — opposition politicians are saying the way money is allocated underscores a lack of transparency from the province’s energy corporation.
Kennedy acknowledged Nalcor is different than a regular government department, and doesn’t have the same sort of oversight and rules attached to it, but he defended that.
“Some of the corporate structure of Nalcor and some of the powers given to them are to ensure that we get the best deal possible as a province,” he said. “To compete in the oil and gas business, they have to be given certain powers that don’t necessarily exist in other government departments.”
Of the $664 million, $655 million will go towards the Muskrat Falls project. The other $9 million Nalcor will use along with $66 million of its own money to make investments in the oil and gas sector.
By comparison, the entire Department of Justice budget this year is $259 million.
It’s possible none of the $655 million will get spent if the project is delayed, or in the event the government chooses not to sanction the Muskrat Falls project.
Last year, the government set aside $348 million for Nalcor, but because of delays in the environmental assessment process, and because Nalcor made enough money to pay for its own oil and gas investments, they didn’t need to touch the money.
Kennedy said that if the government chooses to sanction the Muskrat Falls project, the $655 million will be part of a total cash influx from the province of around $2 billion.
However, he said because it’s an investment in an infrastructure project that will generate revenue for the province, the money spent won’t count towards the deficit or the province’s net debt.
Liberal Leader Dwight Ball said he’s uncomfortable about the big pot of money just sitting there with the government, ready to start flowing as soon as the government sanctions the project.
More broadly, he said, the purpose of having a provincial energy corporation is to have it generate money for the government. Ball said there should be some sense of when Nalcor will start paying the government, instead of the other way around.
“If they decide to go ahead and sanction this project, the money starts flowing,” he said.
“So at what point do we start getting a cheque from Nalcor to support this debt? We haven’t been able to get that answer.”
New Democrat MHA George Murphy called it “sickening” to see that kind of money spent on Muskrat Falls.
“We don’t know what’s on the go there, it’s plain and simple,” Murphy said. “We haven’t been able to get a good breakdown of the spending, where Nalcor is putting the money.”
But Kennedy said he’s firmly holding the purse-strings when it comes to the money, and it will only be transferred to Nalcor as needed, for specific things after Muskrat Falls is sanctioned.
Kennedy said as the final details of the project are pulled together for the sanctioning decision, people will have a better idea what that money will be spent on.
“We don’t simply take $664 million and provide it to Nalcor,” he said. “What you will see when we get to Decision-Gate 3 numbers, however, will be a much greater breakdown in terms of the money required and where that money will go.”
This article has been altered to fix a typo.
Jmcleod@thetelegram.com
Twitter: TelegramJames
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Leaders? Leading us down the garden path, you mean? Then you are correct. There is "an elevated sense of this province" thanks to oil. It is not because of this government or any other and really if any govt should take credit it would be the Liberals for laying the groundwork for the oil deals and for one of the current govt's biggest sources of revenue, Voisey's Bay!! Time to check your history!