Building with the future in mind

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The long and constant debate over cost effectiveness on both sides of the Muskrat Falls debate reminds me of the sweet little girl who broke up in tears with too much of “Bronco Obama” and Mitt Romney's election rhetoric.

But as an adult, I look at the project with a different viewpoint.

I know I cannot and do not qualify

to analyse the cost effectiveness of the Muskrat Falls project, but as a responsible citizen I am at liberty to express my unbiased thoughts the way I see it.

My thoughts are somewhat philosophical.

I strongly believe that “issues create conflict and if unresolved, conflict creates deep division.” On the other hand, “value unites.”

Most megaprojects which are of national interest and will remain as a public asset for generations to come are difficult to assess in terms of real cost effectiveness at the time and always will run over budget.

One of the cost issues is that one cannot add the true variables for next 50 to 100 years into your present calculation.

Recently, I read an article stating this project is not cost effective because private investors showed no interest.

No project of this magnitude and nature will ever be taken up by private investors in this province or elsewhere.

Private investors will not be interested to take on the whole project, and rightly so, because they will not see any return on their investment, not a dime in their lifetime. This example adds no weight to the success or failure of this project.

Imagine for a moment we are talking about building Upper Churchill as a flagship project today. The project just would have never happened.

In spite of all its contractual downside with Quebec, Upper Churchill and its full economic benefit will eventually belong to all Newfoundlanders and Labradorians for generations to come.

This what I call real “value.”

The Hibernia project was not cost effective at the time the project was given the go-ahead. Even though Hibernia will not be there in generations to come, the benefit from Hibernia needs no mention.

Upper Churchill, however, will provide enormous benefit for generations to come and so will Muskrat Falls, if it gets built.

Look more widely

I would like everyone to pause and look around and see all the wonders of the world.

Just look at the pyramids of Egypt and Taj Mahal in India and try to imagine the cost and sacrifices that were made to bury the royals and a loving wife.

Imagine — now, the entire world shares these wonderful treasures and the economy it generates benefits people at all levels and will continue to do so for many more generations.

These are the variables which are impossible to factor into the calculation of such projects. In these scenarios of cost vs. value, value wins hands down.

I feel the Muskrat Falls project may not win the battle on cost now, if the merit of the project is judged by cost alone over a shorter period, but will win my vote on its long-term value.

I would appeal to all Newfoundlanders and Labradorians to look at the value of this project for our future generations and let the experts do the math to keep the construction costs honest.

The content of this letter is my personal view as a citizen who loves and cares about this province deeply.

 

P.K. Ganguly writes from St. John's.

Organizations: Hibernia

Geographic location: Muskrat Falls, Quebec, Egypt India St. John's

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Recent comments

  • Cyril Rogers
    November 26, 2012 - 10:57

    I read P. K Gangluy's comments with interest some three hours ago but decided to wait for a while before responding. Maggy, as usual, puts it very succinctly in her response, but P. K' Ganguly is correct in one respect....big projects ALWAYS run over budget. As for the UPPER CHURCHILL, the project was built without our money and mostly financed by Hydro Quebec. With cash-generating projects like oilfields, the revenue generated more than justifies the cost overruns, as in, for example, the Hibernia project. It was primarily big oil interests elsewhere(and of course the Globe and Mail) who were critical of that project but it turned out to be a boon for our economy. One huge difference between Hibernia and Muskrat Falls....Hibernia was built mostly with private capital. The federal government's stake was merely to keep the project going at a time when the price of oil was in the doldrums. Muskrat, on the other hand, is totally funded by our tax dollars and whatever amount we will need to borrow to complete it...my estimate is that it will be about SIX billion dollars, on top of the money the government has already siphoned off to NALCOR. That's at least EIGHT billion that will never be available for other needs. In addition, the interest costs alone will be from 300-400 MILLION dollars PER YEAR. That's not pocket change and will also be lost to our economy for decades. For what purpose? To supply free power to Nova Scotia through EMERA who, despite paying for the transmission link to NS, will charge us the going rate for any power sent that way. We will not likely send any power other than what we will give them anyway, since transmission costs will be more than it will cost to actually make the power. The island's power needs are not at risk and population trends show they are unlikely to be increasing slowly, if at all, except for the Vale Project at Long Harbour. More efficient heating alone could offset that project and then some. As a matter of fact, with rural populations in decline, it is more likely that power needs will decline to more than match any perceived growth around the Avalon. Other small incremental increases in power supply, with almost no risk to us the ratepayers can adequately take care of future needs on this island. The real haste to do this project has nothing to do with our power needs, now or in the future, despite what government would have you believe. As Cabot Martin stated on Friday, we are being "railroaded" by the government. The prime beneficiaries will be wealthy corporations and individuals who stand to gain multi-million dollar contracts plus the mining companies who will be given heavily-subsidized power, all at the expense of ordinary ratepayers. Does this not remind people of a "banana republic" where the people are told how to think, how wonderful the leaders are, and how they should be ever so grateful for the crumbs they get from the wealthy.

    • John Smith
      November 26, 2012 - 11:37

      LOL...keep on pointing to Cabot Martin as your savior , and you will only turn more people on to the advatages of building the project. You, and those of your ilk keep citing lies, and fabricatios to back up your lunatic claims. Why don't you try arguing with facts...you know factual data?Making claims like Emera getting free power...everyone knows that is a blatant lie....the fact that we will need more additional supplies of energy has been proven again and again. Saying that the cost overruns will be higher than the total cost of the project is unfounded and ludicrous to the extream. Mostly what I ask you is why? Why would the people at Nalcor, and the government want to build this project if it was so detrimental to the province? What would be their motivation. Unlike Cabot Martin they don't own interest in a gas fracking company on the west coast, they don't own any private interests. They see that we have an aging smoke belching plant in holyrood, we will see a need for increased supplies of power in the future, we have seen our costs for power increase by nearly 80% since the mid 90s...these are the facts my misguided friend...not the tripe that you and your co-horts keep spinning everyday.

    • david
      November 26, 2012 - 12:31

      ".....keep on pointing to Cabot Martin as your savior , and you will only turn more people on to the advatages of building the project." Dearest Mr. Smith: your own continued, mindless support of MF does a pretty good job of that for the other side...if you hadn't yet noticed. You just happen to be on the side of the government bully, so you credit yourself with being effective instead of downright embarrassing.

    • John Smith
      November 26, 2012 - 14:58

      Now now Davey...no need to be petulant...LMAO. If anyone is being...mindless here I think we all know who it is. In my comments I point to factual data, in your comments you just insult...with no facts. A typical naysayer. Why don't you debate the project with facts that's al I ask of anyone who would care to do so. I believe we will need additional power, and I believe that Muskrat is the lowest cost option to provide that power. I have thousands of pages of information, and hundreds of exhibits avaiable to back that up. I ask the naysayers(again) to prove otherwise...that's all...

    • Corporate Psycho
      November 26, 2012 - 20:14

      U wouldn'tnow factual if it duffed U in the arse.

  • Winston Adams
    November 26, 2012 - 10:40

    An expensive hydro project was undertaken ont he west coast of the USA by Roosevelt during the depression. There was no demand for this power, but was very much a make work project, and for that reason in those times was it seems a good idea. And then Pearl Hr happened, and this power was then vital to the USA needs. But this is not a parrallel time for the high risk MF, with little real demand for the energy. And to suggest that no private investors would invest for such a project . Hawaii has a electricity load similar to ours. They have some 75 percent thermal generation and 1 percent hydro. To get off oil and go green their task seems impossible compared to ours. So what are they doing? 400 Mw of wind with underwater DC cables.That's more than we will get from MF. Wind will be at least 20 percent of the island total. Compare that to our present 3.5 percent. And the cost ? less than 3 billion cable included. Investors? All private. Granted their power cost is more than here, but investors, not the customers are taking the risk. The paramids in Egypt. Likely a big make work project. Probably kept the commoners from revolting and starving. Their engineers were world class too, just like Nalcor. And likely paid more than the labourers.

  • Can we Newfoundlanders and Labradorians trust the so-called experts P.K. Ganguly speaks of to do the math to keep the construction costs honest?
    November 26, 2012 - 10:36

    P.K. Ganguly wrote in article "I would appeal to all Newfoundlanders and Labradorians to look at the value of this project for our future generations and let the experts do the math to keep the construction costs honest." I would totally agree with P.K. Ganguly if we could trust the so-called experts in keeping the construction costs honest, but we know in today's world of Creative Accounting, practised solely to cover up the corrupt manoeuvres that transpire, it is not the case. Then there are the cost overruns due to prices for materials and labour being unfairly jacked up, so yes if the accounting around the contract were completely honest P.K Ganguly could probably be right. This project can probably be done for less than $3 Billion dollars if we had honest experts in all the disciplines governing the project but everybody is out to make a killing of such projects. I suspect some individuals will pocket Tens and Tens of Millions of Dollars from this Project if it comes in at $7.4 Billion dollars.

  • The Strange Bedfellows Club
    November 26, 2012 - 09:55

    Ganguly writes, “Just look at the pyramids of Egypt and Taj Mahal in India and try to imagine the cost and sacrifices that were made to bury the royals ….” Wow. I think I’m going to cry.

  • Maggy Carter
    November 26, 2012 - 09:26

    Your mention of the pyramids and the Taj Mahal in the same breath as Muskrat is amusing. Both are mausoleums with little or no utilitarian function other than the self-glorification and self-gratification of a handful of powerful individuals. Despite this - some might say because of it - they continue to attract visitors who marvel at their sheer size and extravagance. They were both built - literally - on the backs of the common man. In that perhaps they have something in common with Muskrat which is to be built, financially speaking, on the backs of the ordinary taxpayer and ratepayer of this province. There is no doubt that, once built, Muskrat will have - like the Upper Churchill - economic value for generations to come. But as Maurice Adams has already pointed out, those paying for its construction and those reaping the rewards will not be the same people. Like the Upper Churchill, Muskrat has the potential (by virtue of its inherent risks) to stand for decades to come as a symbol of the continued economic exploitation of Newfoundlanders and Labradorians by forces it cannot control. Like the Upper Churchill - only more so - it will have been a handful of arrogant, short-sighted, powerful leaders of our own choosing who will have been instrumental in perpetuating that exploitation. If the taxpayer is to build something of utilitarian value of which all Newfoundlanders and Labradorians could be proud, something that would unite rather than divide people, and something that would justify substantial federal support, it would be the construction of a transportation link between the island and the mainland of Canada. A causeway or tunnel across the Straits of Belle Isle would be no more viable than Muskrat in the short term, but unlike Muskrat its principal benefits would accrue to the people of this province - not to unseen corporate and political hands that continue to manipulate our government.

  • John Smith
    November 26, 2012 - 08:45

    I think the writer makes a very good point. It is indeed difficult to see the benefits of a project that will span 100 years, or more. We will borrow about 4 billion for the project, at the lowest interest rates, and best credit rating we have ever had...for a project that will last for a 100 plus years, stableize our ever increasing power prices, provide power we will need to grow our economy, stop the pollution in Holyrood, connect us to the mainland. Sounds like a bargain to me...

  • Maurice E. Adams
    November 26, 2012 - 07:53

    Now I have heard it all. Perhaps you should also think about the difference between who it is that bears the cost, versus who it is that will reap the benefit (if there is any).

  • Corporate Psycho
    November 26, 2012 - 07:44

    "Private investors will not be interested to take on the whole project, and rightly so, because they will not see any return on their investment, not a dime in their lifetime. This example adds no weight to the success or failure of this project." Huh. Says you.