The oversight committee has a narrow mandate to monitor “project cost, schedule and risk management” and “to examine issues such as whether management processes and controls are well-designed and followed, contracts are being managed diligently and financial drawdowns comply with the established processes… Oversight of health, safety and environment, quality, regulatory compliance and benefits tracking are specifically excluded from the Committee’s scope.”
Key issues are currently beyond its jurisdiction!
Government should expand the mandate to empower the oversight committee to make recommendations that go beyond monitoring and reporting on costs, schedules and management processes. The mandate should also include the duty to make recommendations to government on all matters relating to Muskrat Falls, including health, safety and environment.
The oversight committee should not only report on progress but also make recommendations as to how the project can be improved. The final decision would remain with government. Four major issues come to mind on which the oversight committee should be tasked to advise government.
1. Water management — What is the impact of the adverse Quebec Superior Court ruling by Justice Martin Castonguay on the rights of Hydro-Québec under the 25-year renewal contract? Unless the flow of water on the Churchill River is optimized, Muskrat Falls will not achieve its full energy potential and will not be able to deliver power when it is needed. This is a complex legal and inter-provincial matter that goes beyond the commercial scope of Nalcor and requires action by government, informed by the expanded oversight committee, as well as by government’s legal advisers.
2. North Spur —The oversight committee’s role is limited to costs and scheduling. Its mandate does not embrace environmental impact and remediation, nor does it encompass threats to human safety. The oversight committee should be specifically requested to advise on all risks arising from sensitive clays at Muskrat Falls, including risks to residents, workers and property. It should advise government as to how it should respond to the petition from Labrador stakeholders calling for the appointment of an independent expert panel to review the geotechnical investigations and remedial measures taken by Nalcor.
3. Joint Environmental Panel Recommendations — The August 2011 joint environmental panel report was largely ignored by the previous government. The oversight committee should revisit the panel’s recommendations and advise on how the overall impact can be remediated to reduce environmental risks, including those to people in Labrador most affected and embracing those related to methylmercury and potential landslides at the North Spur, as well as all other risks.
4. Forensic Audit — The Astaldi contract rose from $1.1 billion to $1.83 million, an increase of $730 million, or 66 per cent. The oversight committee should investigate and report upon why this happened and why we should have any confidence that the revised cost will not be exceeded. This demands a forensic audit!
Falsification of estimates was reported in the Uncle Gnarley blog and later confirmed by the CBC. The CBC report said that their informant, a senior engineer, said, “a forensic audit is the only way to find out what happened,” referring to his claim that cost estimates had been deliberately falsified to secure project sanction.
The oversight committee should advise on how to achieve independent verification of information supplied by Nalcor as part of a full forensic audit. It should not be content to rely solely on information from Nalcor.
The expanded “hybrid” committee of independent members and public servants introduces new perspectives and expertise. By adding the duty to advise, and removing restrictions, government will create a more transparent, effective oversight process. The hybrid oversight committee would offer improved decision-making which combines the expertise of our public service with that of concerned citizens, working together to protect the public interest and restore confidence in government.