It was already strange: Prime Minister Stephen Harper calling a news conference that, apparently, his provincial counterpart here knew nothing about.
Harper was going to be in Happy Valley-Goose Bay to announce a loan guarantee for the Muskrat Falls project, but in St. John’s, Premier Kathy Dunderdale wasn’t aware of what Harper had in mind for his Labrador travels. It was not the most auspicious way to herald one of the last pieces needed for this province to launch a multi-billion-dollar hydroelectric venture. Usually,
Friday afternoon announcements are saved for the issues politicians want to bury, not trumpet.
Still, there they all were: Dunderdale, Harper and Nova Scotia Premier Darrell Dexter, safely ensconced behind security on the Goose Bay airbase, announcing another important step towards a project that already looks like it’s fully underway.
The nuts and bolts? The governments have worked out the terms under which the federal government will provide a guarantee to cover up to $6.3 billion of what is at this point a $7.4-billion project. The governments involved say that, during the 35 to 40-year term of the borrowing for the project, that will mean a savings for electrical customers of something like $1 billion. The governments also took the time to claim that the project shows that economics can work with the environment — a claim that might well be challenged by those concerned about the direct environmental impacts of the project.
Of course, no political announcement would be complete without a little bit of political stumping for the local member of Parliament — Conservative Labrador MP Peter Penashue has been at the centre of controversy over election spending allegations, so it’s probably no surprise that the prime minister took the opportunity to talk about how important Penashue’s input has been to moving the loan guarantee forward.
What’s left? Well, perhaps to see just what it is the loan guarantee contains, and what real effect it will end up having on the interest rates when the province and Nalcor make their case to the bankers who will put up the necessary cash.
The news release from the Prime Minister’s Office says “the governments of Canada, Newfoundland and Labrador, and Nova Scotia have agreed on the terms for a federal loan guarantee for the Lower Churchill projects,” and that “the Government of Canada continues to work with the financial advisor to ensure that the support provided to the projects is financially responsible to Canadian taxpayers. … The term sheet agreement has been signed by the governments of Canada, Newfoundland and Labrador and Nova Scotia, as well as the utilities, Nalcor Energy and Emera Inc. It sets out the terms and conditions of the loan guarantee which will be formalized in detailed agreements.”
This guarantee has been the subject of a year and a half of back-and-forth negotiations and analysis, so chances are there’s something more in its terms and conditions than a simple “here’s a guarantee.” As we know from this project already, there’s often a long time between term sheets and legal agreements.
And, like the power purchase deal that will see this province’s residents pick up the full cost of the project — in exchange for 40 per cent of Muskrat Falls’ power — there are many details that have yet to be made public.
On the face of it, Harper has started to deliver on an election commitment to back the project. Just exactly what has been delivered remains to be seen.