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Hard to believe bureaucrats didn’t know about Muskrat Falls cost increase: Nalcor manager

Nalcor Energy general manager (commercial, treasury and risk management) Auburn Warren says he believes former government deputies will testify they were aware of changes in the Muskrat Falls project’s estimated capital cost at the time of financial close in 2013. Warren was on the witness stand at the inquiry into the project on Tuesday.
Nalcor Energy general manager (commercial, treasury and risk management) Auburn Warren says he believes former government deputies will testify they were aware of changes in the Muskrat Falls project’s estimated capital cost at the time of financial close in 2013. Warren was on the witness stand at the inquiry into the project on Tuesday. - Contributed

Civil servants were aware of financing details, Auburn Warren says

ST. JOHN'S, N.L. —

In 2013, into the fall, in a house on Barnes Road in St. John’s, a handful of Nalcor Energy staff were nose to the grindstone, negotiating with the Government of Canada and financiers on details of the financial arrangements for the Muskrat Falls project.

On the witness stand at the Muskrat Falls Inquiry on Tuesday, Nalcor general manager Auburn Warren (responsible for commercial, treasury and risk management) said the Crown corporation staff worked side-by-side with provincial government representatives.

Warren said he believes they were all aware of the capital cost estimate being changed from $6.2 billion to $6.5 billion by financial close. That’s despite government ministers of the day (save former premier Kathy Dunderdale) testifying they had no idea.

He was specifically asked if he could assure that the civil servants, who would presumably report up to their various ministers, were clearly informed of the change in cost.

Nalcor Energy chief financial officer (CFO) Derrick Sturge at the Muskrat Falls Inquiry. - SaltWire File Photo
Nalcor Energy chief financial officer (CFO) Derrick Sturge at the Muskrat Falls Inquiry. - SaltWire File Photo

He was asked about an email, wherein Nalcor Energy chief financial officer Derrick Sturge asked the Nalcor project finance team — including Warren, Rob Hull and James Meaney — to make sure the change was conveyed.

The email was sent on Nov. 20, 2013 at about 6:30 a.m. Sturge has testified the update was something he had been thinking about in a to-do list, after the sign-off on the change in cost estimate by Nalcor president and CEO Ed Martin.

“I’d obviously just jumped out of the shower or something and it was going through my head of what I needed to get done that day type thing,” Sturge said, when testifying on March 27 about the email.

As for why Sturge didn’t just email government ministers at the time?

“It was the reality of moment we were in, I suppose,” he said, testifying to specific paths for the flow of information to the government.

The question then was whether or not Warren could confirm that the government’s officials were made aware.

“At that location, Paul Myrden (Department of Finance) would have been regularly attending the meetings that we were having down there and Donna (Brewer, deputy minister of Finance) would visit as well, but I don’t have a direct recollection of actually having that meeting with Donna and Paul,” Warren said.

Emails in evidence show Brewer, Myrden and Paul Morris, from the Department of Natural Resources, were involved in back and forth on various details at the time, including on the cost overrun escrow account (COREA), a feature of the financial arrangements.

But what about the basic change in cost?

Would Warren testify they were clearly aware?

“It was a busy time, but again, they were around the table,” he said, adding he would have “a hard time believing” the civil servants didn’t know.

“It was a busy time, but again, they were around the table." — Aubrey Warren

Warren was also asked about information passed on for then-Finance minister Tom Marshall, setting the cost at $6.2 billion just before the change to $6.5 billion was approved. Marshall told the Inquiry he never knew about the $6.5 billion cost.

Warren said the time around financial close on the project was a busy time, and he personally didn’t think to go back to correct the information previously sent for Marshall.

Brewer, Myrden and Morris are scheduled to be called as witnesses on June 17.

Meanwhile, Warren was also asked by lawyers about the forecasted project benefits, long-term financing and estimates on power export value.

Hearings continue Wednesday with Nalcor Energy project director Paul Harrington, who is scheduled to testify over two days.

Twitter: @TeleFitz


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