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EDITORIAL: Muskrat mess, upsized

The construction site of the hydroelectric facility at Muskrat Falls is seen on July 14, 2015.
The construction site of the hydroelectric facility at Muskrat Falls, circa July 14, 2015. — CP file photo

Every now and then, you get reminded of just how massive the scale of the Muskrat Falls inquiry actually is: the millions of pages of documents, the intricacies of that paper trail, and the constant frustration that the politicians in charge of the whole mess read little or none of it.

Only a fraction of that paper trail is available for public view. Inquiry counsel and the commissioner have to decide what’s germane for public review, and that means whole libraries of material don’t see the public light of day.

But every now and then, other things that hint at the sheer size of the Muskrat mess rear their heads — like a short section in a letter that Nalcor Energy sent to the inquiry, asking for documents be withheld from public view.

Here’s that section, dealing with a commercial dispute that ended with Nalcor removing the main contractor, Astaldi, from the Muskrat Falls project: “Astaldi has given notice of its position that Contract CH0007, the Bridge Agreement, the Completion Agreement and subsequent agreements fixing Astaldi’s entitlement to compensation for work performed are unenforceable, that Astaldi is entitled to payment for ‘all work done and all services and materials supplied on a cost reimbursable … basis, with industry overhead and profit in each case,’ or alternatively to ‘damages for negligence and breach of contract in an amount equal to the difference between the price of the original Agreement, and Astaldi’s incurred cost at completion, including reasonable overhead and profit.’”

But every now and then, other things that hint at the sheer size of the Muskrat mess rear their heads — like a short section in a letter that Nalcor Energy sent to the inquiry, asking for documents be withheld from public view.

According to Nalcor, Astaldi wants money, “‘for all work, services and materials supplied to the Project, including reasonable overhead and profit’ and an award ‘of damages in the amount of $500,000,000.’”

In other words, the stakes for everything are massive. The arbitration isn’t complete yet — even the legal costs and legal timelines for disputes over the project are huge — but essentially, Nalcor is alleging that Astaldi wants to be paid in full according to the original deal it had, and wants half a billion dollars in damages as well.

Nalcor may well believe it has a fine defence to Astaldi’s arbitration claim. It may also be the case that multinational construction giant has taken an “everything and the kitchen sink” approach to quantifying the damages it feels it deserves — in other word, it may be asking for the moon and hoping for a lesser satellite.

All that being said, the paperwork reveals a whole new unexpected and unplanned risk for the project’s bottom line.

Astaldi may lose, or they may win. But just like everything else with the Muskrat Falls project, it’s only now, well after the fact, that the ratepayers — who are expected to pick up every tab for this project — are finding out there might be another $500 million on the table.

It’s the project that just keeps taking.

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