Dec 17, 2020
Ottawa offers temporary debt relief for N.L.'s troubled Muskrat Falls project
The Canadian Press
ST. JOHN'S, N.L. -- Ottawa is providing temporary debt relief to Newfoundland and Labrador for the troubled Muskrat Falls hydroelectric project and appointing a top bureaucrat to oversee the project's financial restructuring.
Prime Minister Justin Trudeau said Thursday by video conference that his government will temporarily wave debt payments owed by Nalcor Energy, a province-owned corporation. Ottawa had offered a loan guarantee for the project.
Newfoundland and Labrador Premier Andrew Furey said Trudeau's decision will ease pressure on his province's finances. "This means the province doesn't have to borrow $844 million in payments, almost all of which would have been required this month and added to our debt," Furey said during the call with the prime minister.
Newfoundland and Labrador projected a $1.84-billion deficit in its latest budget and a net debt of roughly $16.4 billion. In a province of about 520,000 people, that works out to just over $31,000 per person.
The Muskrat Falls project looms large over the province's faltering finances. The project was sanctioned in 2012 at a cost of $7.4 billion, but the price tag had ballooned to $13.1 billion as of September. With full power delayed until September 2021, the project isn't generating revenue from ratepayers and payments are coming due.
Without a significant change in the project's financial situation, Nalcor's latest projection shows the province's electricity rates jumping to more than 23 cents per kilowatt hour in 2022. According to Newfoundland Power's website, its current residential rate is 12.2 cents per kilowatt hour.
"Our government is committed to working with Newfoundland and Labrador to ensure that the ongoing Muskrat Falls project remains on stable financial footing," Trudeau said.
Trudeau added that his government appointed Serge Dupont, former deputy clerk of the Privy Council, to oversee the financial restructuring of Muskrat Falls.
Dupont will work with Brendan Paddick, chair of Newfoundland and Labrador's rate-mitigation team, on the restructuring. Furey assembled the rate-mitigation team in September, and Paddick stepped away from his role as Nalcor's chair to lead the team.
