Loan guarantee nearly done: premier

James
James McLeod
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Muskrat Falls timelines shift again in Dunderdale’s update to reporters

Premier Kathy Dunderdale speaks to media during a news conference outside the House of Assembly Wednesday afternoon. — Photo by Keith Gosse/The Telegram

Premier Kathy Dunderdale is saying a loan guarantee for Muskrat Falls is still on track, and there will be a fully open public debate on the project — eventually.

Dunderdale was speaking to reporters Wednesday following a meeting with Prime Minister Stephen Harper earlier this week, where they talked about the loan guarantee along with a range of other issues. Dunderdale said the loan guarantee is almost finalized; and with luck, the public will have a full package of information on final cost estimates for the massive Labrador hydroelectric project by the end of October.

“That was a conversation I had with the prime minister, again, about the importance of the loan guarantee, what it will mean to the people of the province, because it’s significant savings directly to the people of the province by reducing the cost of the project,” Dunderdale said.

A federal loan guarantee for borrowing associated with the Muskrat Falls project could be worth on the order of $600 million in savings, since the province would be able to borrow at a lower interest rate.

Dunderdale said they were finalizing the last bits of the loan guarantee, but didn’t go into details.

She said in order to finalize the loan guarantee they first need final project cost estimates — so-called “Decision Gate 3” numbers — which Ottawa wants to see before they nail things down.

Dunderdale expects Muskrat falls debate in October

Once the loan guarantee is finalized, those terms will be provided to Manitoba Hydro International (MHI), an independent contractor which is doing an analysis on the final decision gate three numbers.

“That information that’s needed to inform MHI’s final report so that we all know what we’re talking about,” Dunderdale said. All of this represents yet another delay for the Muskrat Falls project.

When an agreement in principle for a loan guarantee was signed more than a year ago — in August 2011 —  there was some hope that the terms could be drawn by the end of November 2011.

At one time, decision gate three numbers were expected by late June. As recently as August, there was widespread hope that the final cost estimates would be made public by mid-September.

The current timeline appears to be that Dunderdale hopes the decision gate three numbers will be finalized, then the loan guarantee language will be pinned down, then MHI will complete its report all within the next four weeks or so.“I expect all of that to be in play before the month of October is done,” she said.

From there, the whole thing will go into the House of Assembly for a debate. Opposition parties had expected some negotiation on the structure of that debate — notably, the Liberals have said they need the ability to question experts on the floor of the House — but it looks like that won’t be happening.

“Listen, the Liberals laid down the template for these kinds of debates on Voisey’s Bay and that’s the template we’re going to use,” Dunderdale said. “There’s the same opportunity to question facts and figures. There has been no other project in the history of this province that has ever gotten this kind of scrutiny. Ever. There’s never been this amount of information release, this amount of study being done.

”All of this got a chilly greeting from the “2041 Group” a confederation of lawyers and former civil servants who oppose the Muskrat Falls project.

At a news conference coming on the heels of Dunderdale’s conference, former politician and labour activist Richard Cashin called the whole situation undemocratic.

He argued that the government has effectively neutered oversight of the project when they limited the scope of the Public Utilities Board review of the project.

“I think every man woman and child in Newfoundland expects this government to do the right and honourable thing. No more secrecy. Have the debate open. Have the MHAs the right to call their own witnesses. The government can provide theirs,” Cashin said. “What is wrong with open parliamentary debate? It’s the essence of democracy which up until now has been thwarted by this government.

”jmcleod@thetelegram.com

Twitter: TelegramJames

Organizations: Manitoba Hydro International, Public Utilities Board

Geographic location: Newfoundland, Ottawa

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  • Winston Adams
    September 27, 2012 - 12:08

    FINTIP , you summed this up right on. We might as well have a king, and a royal court for the well connected. The lowest cost power for the average homeowner doesn't matter. And all the government maneuvers are intended to bypass this basic principle. And what will the House debate do? The oppostion parties have not come out firmly against MF. They will have little time to analysize new DG3 numbers, and the debate may be over before any opposition gets underway, or before MF is then already sanctioned. Many of the public who are following this know its flaws and risks, but many are not following this , or it is too complex for them to have an informed opinion. Time seems to go against this MF scheme. Perhaps time will save us. NOva Scotia has 2 years before they confirm they are in? And the federal guarantee, perhaps they will hang off pending NOva Scotia's decision? So we are seeing delay after delay, and time continues to bring out more and more flaws in this scheme. And time is allowing more and more of the public to realize what's at risk and much higher power bills will impact our cost of living. And also will impact our business competitiveness- surprising the Board of Trade is not addressing this. I guess too many are well connected and will benefit from the construction benefits.

  • Mr. Penner, don't worry the debt owed won't be set back to Zero, it will remain on the books to be collected at a later date.
    September 27, 2012 - 11:49

    FRED PENNER wrote "I am curious...if the world economies collapse and are "set back to zero" why would this not apply to the "Billions and Billions" accountable from the construction of Muskrat Falls"? As one Newfoundland and Labrador Historian O'Neill wrote in an article to one of the newspapers in this province a few years ago, Newfoundland and Labrador paid off its debt it incurred during both Great Wars in 3 ways, it paid it off with the BLOOD of its citizens in both Wars, it paid off the Millions of dollars it owe up to the last cent of debt with dollars to England and it paid of its debt by losing its country status. Fred Penner, I suspect that our debt on the Muskrat Falls will not be set back to Zero. The debt of the past wasn't forgiven, it was paid off in three ways, and you can bet your life, should things be set back to Zero (and it can happen), debt owed financial institutions will not be forgiven, it will still remain on the books to be paid at a future date.

    • Fred Penner
      September 28, 2012 - 06:21

      Fascinating! Please read more books and report your impending enlightenment!

  • Fintip
    September 27, 2012 - 10:45

    It's time this muskrat was skinned and its hide nailed to the barn door. There are some serious problems with the project - aside from the obvious one that it is uneconomic and unnecessary. Undoubtedly the feds already know the DG3 price tag and senior bureaucrats are warning Harper and Flaherty of the significant risks to the federal treasury. Yesterday Dunderdale was quoted as saying that Muskrat would be great revenue generator for the province and would help establish it as a power house of energy. Newfoundland and Labrador is already a power house of energy Ms. Dunderdale, but unlike the offshore petroleum sector our electrical generating industry contributes little or nothing to government revenues. When and if Muskrat is added to the failed Upper Churchill, net industry revenues to government will be overwhelmingly negative - that is, they will constitute an enormous drain on the provincial economy. Notwithstanding any federal guarantee, Muskrat will inevitably lower the province's credit rating such that our cost of borrowing will increase significantly. Discretionary per capita spending in the province will decline as homeowner utility costs rise sharply. It is almost certain that during the 57 year amortization of the project, the provincial treasury will be called upon to directly subsidize the project by way of annual contributions to NALCOR (indeed this is already happening). Social services supports to the elderly and unemployed will also rise as government is called upon to pay higher utility bills on behalf of those families who can no longer bear the costs. Dunderdale and Kennedy will argue that Muskrat will allow major mining projects to proceed in Labrador. They are being deceitful. The truth is that these projects will proceed with or without Muskrat power, and will provide an enormous return on investment for shareholders. Power is readily available from other sources and, if they do commit to Muskrat power, the companies will insist that they be given electricity at rates well below the cost of production. The resulting unnecessary subsidy to an already wealthy industry will of course come at the expense of the homeowner who will pay disproportionately more. There's no end to the economic grief that could emanate from this one project - albeit the largest government funded project ever undertaken in the province's history. The concept of economic rent appears lost on this government. The development of natural resources, whether renewable or non-renewable, must provide significant returns to their owners - in this case the Newfoundland public. To the degree that the public (taxpayer) is being asked to assume significant technical, economic and financial risks, those returns must be proportionately greater. That basic economic principle is being deliberately ignored in this instance. Why? Well the answer lies in who stands to gain most from the project versus who stands to lose. The latter group (which includes the vast majority of us) get to vote in or out a government every four or five years, but we are deluding ourselves if we think for one second that we are in control of our government. No, as our history of corruption and greed in this province so well illustrates, it matters little which brand of government is in power. The views of the populace are a minor obstacle in their headlong rush to feather their own nests by catering to the well heeled, well connected, well entrenched few who - despite their existing wealth - are insistent they be given yet a bigger slice of the pie. What is particularly sad is that, aside from the sizeable group of professionals who have weighed in on this debate at their own peril, there is as yet no groundswell of public outrage at the very real prospect that this abomination of a project is about to be given the green light. As Yogi Berra said, "it's deja vu all over again".

  • Prime Minister Harper please make sure before you approve the loan guarantee that this project will not economically bankrupt Newfoundland and Labrador its people
    September 27, 2012 - 09:03

    While I was first elated before I knew the probable cost of Billions and Billions of dollars to develop the Muskrat Falls venture, that we would have an exit other than Quebec for our hydro energy through the Anglo Saxon route, there is so much about this proposed Muskrat Falls Project that is frightening the hell out of me. First and foremost the province of Newfoundland and Labrador has the most elderly population of seniors in all of Canada surviving on very small pensions that are not indexed to inflation, in an era when all the consumer goods and services are severely escalating in cost, and the big question, whether or not they will continue to escalate will depend on whether the World economies can get back on track. The cost of electricity is supposed to hit the roof for the rate payers of Newfoundland and Labrador when the humongous mortgage on the Muskrat Falls Project comes due and yet the irony is everything else might be set back to Zero if there occurs a failure to revive the economies of the World that we trade with. Should we not wait to see how successful the World leaders will be in reviving the little DNA that is left of the last economy that crashed in October 2008? Yes, indeed, if the leaders fail to come to some sort of consensus on the World economy, everything could very well be set back to ZERO and we will be left holding Billions and Billions of dollars of debt on the Muskrat Falls, to pay for electricity, when electricity or some other type of energy might, otherwise, be able to picked up for less than a cent per kilowatt hour!

    • Fred Penner
      September 27, 2012 - 11:04

      I am curious...if the world economies collapse and are "set back to zero" why would this not apply to the "Billions and Billions" accountable from the construction of Muskrat Falls?

  • Erax
    September 27, 2012 - 07:59

    It's a great project that must go through.

  • Watcher
    September 27, 2012 - 07:47

    The Liberals are a bunch of hypocrites. I remember when Brian Tobin was trying (and failed) to get this project pushed through... the Liberal Party thought it was a great project then! But no, now being part of the opposition, they have to oppose and debate EVERYTHING. I guess you have to justify your job some how. Just let it go and do it already.

  • Maurice E. Adams
    September 27, 2012 - 07:41

    The only way for the public to have its 'democratic' right to 'participate' is this process is for the matter to be referred the our Public Utilities Board (PUB) whose job it is to determine if a legislative requirement to provide lowest cost power to ratepayers has been met. The PUB normally does so through public hearings. Otherwise, government is thumbing its nose at ratepayers, taxpayers and pushing this through for the benefit of the business community and especially the mining companies in Labrador.

    • Robert
      September 27, 2012 - 08:55

      With all due respect we've participated in the democratic process; its called a provincial election. And I must remind you the PUB is NOT elected. Government is not thumbing anyone except those who voted and expect it to govern based on the mandate that was given. In due course another election will happen and we can again decide. As for this project........get on with it seems to be the concensus!

    • Jay
      September 27, 2012 - 09:23

      You can't be serious about the PUB. Isn't this the same organization which is chaired by the clown who doesn't believe in global-warming? While I share many of the concerns about Muskrat Falls, I can't see the PUB as a credible source of democratic participation or accountability. By the way, the Muskrat Falls issue was front and centre during the last election. Sorry if that upsets Richard Cashin.

    • Eli
      September 27, 2012 - 09:33

      Wrong Robert! Muskrat was not even mentioned in the election campaign. Truth be known, Dunderdale and Martin made sure it was kept quite.

  • Eli
    September 27, 2012 - 07:31

    Her demeanour on TV last nite was so obviously fake. Why to hell didn' t one of the reporters ask her what's holding up the deal? Does it take over two years to cross the t's and dot the i's? Bad enough we're being rooked by Nalcor, it appears to me this sham will cost us a whole lot more when all is said & done.

  • Don
    September 27, 2012 - 07:22

    Cashin , a "has been" politician looking for another 15 minutes of fame. You've had your day so go back to sleep.

  • Fred Penner
    September 27, 2012 - 06:52

    Notwithstandingany issues or questions regarding Muskrat Falls, what Mr Cashin is describing is a courtroom not a parlimentary debate.

  • W. Bagg
    September 27, 2012 - 06:49

    They gotta keep the numbers from everyone to limit research & investigation prior to the debate. I'm sure a few people seen them by now, probably Dunderdale, Kennedy, Marshall and John Smith.