Put your money where your Muskrat is

Brian
Brian Jones
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When you go whale watching in the spring, look for seagulls. If dozens of seagulls are circling a specific spot on the water — or, even better, floating on it — it could be a sign a whale is feeding below. Humpbacks must be messy eaters, leaving lots of tidbits for gulls to feast on.

Similarly, if you’re looking for ways to make money, watch for circling businessmen, who by their very nature cannot pass up an opportunity to earn profits. Don’t get your backs up, gentlemen. That is not a criticism.

Recall 2003, when Newfoundlanders (and Labradorians) elected Danny Williams as premier and prime defender, and began the long-overdue process of leaving the 18th century behind and becoming as rich as Alberta and as socially advanced as P.E.I.

Williams touted development of the Lower Churchill’s hydroelectric capacity, and went looking for private investors to get the turbines going.

The ensuing silence was never — and has never — been fully explained.

Corporate investors for the planned project at Muskrat Falls were nowhere to be found. Details about who was asked to invest, and why they declined, were never released.

Almost a decade has passed, but this failure to find private investors to develop the Lower Churchill remains one of the most important aspects of this controversial issue.

To use an easy analogy, if Muskrat Falls really will churn out profits — as the provincial government continues to insist — investors should be circling it like hungry gulls.

Did the corporate executives who declined to invest in Muskrat Falls merely say, “No thanks,” and then engage Williams in polite chitchat about hockey? Or did they outline their reasons in writing? If anyone has the answer, please let the rest of us know.

The provincial government never did.

But what the CEOs and chairmen of the boards said or didn’t say is far less important than what they did. Or, more accurately, what they did not.

They did not invest. They did not put company money into developing Muskrat Falls.

That alone provides plenty of information to the public, the voters, the ratepayers. In this instance, we can reverse a cliché: “Lack of action speaks louder than a lack of words.”

You don’t have to go far to find a major player in the North American hydroelectricity industry.

Fortis Inc. has offices in downtown St. John’s. It owns utilities and hydroelectric assets in Ontario, Alberta, B.C. and the Caribbean. Newfoundlanders (and Labs) are most familiar with it as the parent company of Newfoundland Power.

Fortis was among the companies asked by the provincial government to invest in Muskrat Falls. It declined.

It would be interesting to see the napkin upon which Fortis president and CEO Stan Marshall jotted down the estimates — construction costs, transmission, labour, power rates, demand, profits, losses, etc. If only the waiter had hung onto that napkin, he might have been able to make a huge contribution to the ongoing debate.

But Fortis and Marshall released no figures, understandably.

All they did was say the company does not get involved as a minority player in government projects.

As The Telegram reported in May 2011, Marshall told Fortis shareholders, “Without going into the merits of any project, we wished them well, but we do not get involved with minority situations with Crown corporations.”

A reader can’t help but add, “unless healthy profits are in the offing.”

The St. John’s Board of Trade publicly supports developing Muskrat Falls.

Of course it does. Strangely enough, this group of capitalists isn’t clamouring to invest in the project.

Apparently, Muskrat Falls is a great idea only if taxpayers’ money is being blown. Private money, not so much.

Brian Jones is a desk editor at The Telegram. He can be reached at bjones@thetelegram.com.

Organizations: Fortis Inc., The Telegram, North American Board of Trade

Geographic location: Muskrat Falls, Alberta, Ontario Caribbean

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  • W McLean
    November 02, 2012 - 11:45

    "Details about who was asked to invest, and why they declined, were never released." - Nothing Could Be Further From The Truth™. Kathy Dunderdale blabbed on the radio about how they spent five years trying to get an equity investor on board. That investor? Hydro Quebec: http://www.youtube.com/watch?v=d6yYd6Aj5ec

  • Jerome
    November 02, 2012 - 10:02

    Hey John Smith. How many NL taxpayer dollars went into the construction of the Upper Churchill?

  • Too Funny
    November 02, 2012 - 08:34

    "the company does not get involved as a minority player in government projects." That was all the analysis Fortis needed. Would you put your money into a project that was going to be managed by government. Of course not. Just look at the pension plans that government is suppose to be managing.

  • David
    November 02, 2012 - 08:31

    If this project was see nto be a worthwhile investment, the private sector would be clambering to get in on it. Pension funds and insurance companies in this country currently face a very serious shortage of suitable, long term, significant projects to invest and find a home for billions of dollars needing to find a rate of return. A huge infrastructure project like this, one analysed and structured to have an acceptable amount of investment risk, would be fought over, or could be financed in the capital markets in a heartbeat. And? ......crickets. The market is quielty amused at the spectacle of Newfoudland walking its own plank, and going on with its serious business of finding proper investments.

  • John Smith
    November 02, 2012 - 08:06

    Hilarious...very, very funny stuff. What investors did Mr. Williams approach? Do you have the names? No I didn't think so. As well Stan Marshall said they would be happy to invest, but they wanted to control the project. Remember what happened the last time we let a private compnay get control of a hydro project? It was called the Upper Churchill. Oh,... and we did get a minority share private investor, Emera who are kicking in nearly 2 billion dollars. Another weak, nonsesical fluff piece from Mr. Jones...and the beat goes on...

    • david
      November 02, 2012 - 09:21

      If this project was onf any interest to institutional investors, Mr. Wiiliams wouldn't have needed to call anyone...his phone would have rung off the hook. The banks would have him on speedial or in their "Fave 5". And we all know that Mr. Wiiliams would not have even considered keeping that information, a source of more chest thumpinfg for himself had it ever occurred, to himself. He would have called a press conference for each such phone call received, and publicly gloated about it. .......crickets. And you're still a tool.

  • Jerome
    November 02, 2012 - 06:43

    You've summed it up Brian, in a nutshell.