Settling up

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It’s the gift that keeps on giving. Well, it’s the gift we keep on paying for, anyway. Tuesday, the provincial government announced it had settled with Fortis over the seizure of that company’s interests in a hydro project that had been jointly owned with AbitibiBowater, and was caught up in the province’s 2008 seizure of  Abitibi’s Newfoundland assets.

The latest settlement? More than $76 million — $22.4 million in lost profits for the company, and the assumption of $54 million in debt still outstanding for the Exploits River hydro project. (An interesting aside about that $54-million debt? AbitibiBowater held a 49 per cent interest in the Exploits River Hydro Partnership, and the partnership had $59 million in debt in 2010 when Nalcor took over the partnership’s loan payments. So, effectively, the province just took AbitibiBowater off the hook for $26.5 million in debt.)

In 2011, the province settled with other partners in a different hydro project at Star Lake, paying Enel Green Power North America $32.8 million and assuming a $40-million loan obligation from Sun Life Assurance in exchange for its interest in the dam. The total? In all, $148 million.

Those assets were seized in 2008, when the province rushed legislation through the House of Assembly to strip AbitibiBowater of all of its Newfoundland assets — and, in the process, accidently seized the company’s contaminated Grand Falls paper mill as well.

At the time, the government maintained it was repatriating valuable forestry and water rights.

Well, the forestry rights have been so valuable that, over the last five years, the province has been unable to interest anyone in setting up shop to use them.

The water rights?

They may well be valuable to the province for years, but the taxpayer has paid dearly for them.

The federal government has had to fork over $130 million to settle a NAFTA claim by AbitibiBowater over the seizure.

The province tried to take Abitibi to court for environmental cleanup costs — and lost, all the way to the Supreme Court of Canada.

The numbers in that case? Somewhere between $50 million to $90 million in cleanup costs at a minimum, and perhaps as much as $150 million to $270 million — the province’s own estimates vary. Not only that, but the government had as much as $10 million in legal fees.

Total tab? Somewhere between $338 million and $558 million across the two levels of government.

That’s pretty pricey for what looks like somewhere around 54 megawatts of power, when all of the former papermaker’s hydro assets are considered.

And in the current fiscal situation, there isn’t enough money to provide security at one of our “assets.” Security staff were told they were being removed from the mill on April 1.

Yet, here’s Natural Resources Minister Tom Marshall in the House of Assembly Tuesday: “It was a great project for the people of the province. These are assets that belong to the people. With the land and the timber and the water rights, these assets, we couldn’t let them go, we couldn’t let them be sold off to somebody else at a bankruptcy sale when the province couldn’t get them. … We had to do it, and we had to move quickly, and you know, we’ve protected the assets that were owned by the people of the province.”

And Tory MHAs sit there and clap rapturously.

Fascinating.

Organizations: AbitibiBowater, Exploits River Hydro Partnership, Sun Life Assurance NAFTA Supreme Court of Canada

Geographic location: Abitibi, Newfoundland, Exploits River Star Lake Grand Falls

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  • Just sayin
    May 02, 2013 - 15:11

    These assets could have been bought by Fortis,(Nfld Power) at a fair and much lower cost and added to their many small hydro assets, to serve the Nfld customers. It would have avoided the huge expense incurred at taxpayer cost. But no, the way it was done adds to the manoply of Nalcor to prevent any competition as to who can produce electricity. As David says , they see themselves as self made energy barons... all at tax payer expense.... based on a vision... tunnel vision.... that seems likely to be a nightmare.

  • Tony Rockel
    May 02, 2013 - 14:27

    Short of a takeover by the Taliban, this government is the worst disaster ever to befall our province. I can't see how our economy will ever recover from the orgy of corruption and sheer economic idiocy we've been subjected to since these self-serving morons came to power.

  • Maurice E. Adams
    May 02, 2013 - 13:39

    Point taken, David. And what an elephant it is.

  • Jon Smith
    May 02, 2013 - 10:47

    Other amounts paid, which are not included here, would be the expropriation of the other Abitibi Power assets at Grand Falls, Bishops Falls and Millertown ($150 million or so). As well there were millions paid to union members which were paid separately later by the Abitibi successors and not paid back to government. In all the total bill could be $ 1 billion to $ 1.5 billion by the time its all said and done. Nothing small about our rulers-no sir!

  • Tony Rockel
    May 02, 2013 - 09:58

    Our PC government---a confederacy of dunces.

    • david
      May 02, 2013 - 12:12

      Drop the "PC" and you have a timeless Newfoundland truism. Here's another one: As long as this place has so many naive partisan suckers for citizens, nothing will ever change.

  • Wondering
    May 02, 2013 - 09:15

    The cost of this power, all told is about $9,000.00 per kilowatt of output (almost as much as Muskrat falls power). That's about 5 times the cost of reducing demand with Efficient home electric heating. And that would really be of benefit to the people, giving lower heating costs. But , hey, who's concerned about the "people'. 96 percent of residents ( over 200,000 accounts) want conservation if it will save them money. How many actually opposed the Nfld power rate increase in writing to the PUB. Two.

  • Foghorn Leghorn
    May 02, 2013 - 09:13

    I simply do not understand why there was so much urgency to seize these assets in the first place. The provincial government could have participated in the purchase of assets after the bankruptcy. What would be the problem if another company purchased the hydro assets? Where exactly other than NL Hydro could they sell the power? We are pretty well a captive market, no pun intended. I feel quite confident that the provincial government would still have ultimate control over the timber rights. The timber rights in Corner Brook are literally linked to how many paper machines Kruger operates. Maybe someone could enlighten me and others as well.

  • Cyril Rogers
    May 02, 2013 - 08:09

    Another great decision by the former great Williams administration that their current cronies are paying for, both politically and financially. When the cost for Muskrat Falls comes in, this will look like chicken feed. The destruction of the current PC government is of no consequence, as the political void will be filled by someone, anyone...... and we will be none the worse off for it. Unfortunately, we can't un-spend and we can't un-dam Muskrat Falls. Therein lies the real tragedy in all of this!

  • Maurice E. Adams
    May 02, 2013 - 07:00

    Government had no problem letting the assets of FPI go. ...... But then again, that had nothing to do with Nalcor, did it? It was only beneficial for the province's $1 billion fishing industry, the province's largest employer. Fascinating.

    • david
      May 02, 2013 - 12:25

      Maurice: You missed "the hidden elephant", IMO....Prepping a nice, cushy well-paid parking stall in a corner suite at a sprawling, conglomeratic Nalcor (....as if ! But it's their dream, not mine) sometime down the road is a lot more appealing to all these political hacks than the positively repugnant thought of ever being relegated to accepting any sort of "job" related to anything to do with the ...urrrpppp... fishery!?! They see themselves as "self-made" energy barons now....pleeease! They're building themsleves a Taj Mahal of Pork.