No formal sanction yet
Natural Resources Minister Jerome Kennedy fielded yet more questions on the Muskrat Falls project Tuesday in the House of Assembly. After question period he spoke with reporters. — Photo by Gary Hebbard/The Telegram
The provincial government continues to insist no final decision has been made on the Muskrat Falls project, but Tuesday afternoon politicians heard more news indicating that things are full steam ahead.
Natural Resources Minister Jerome Kennedy told the House of Assembly during question period the government has transferred $45 million to Nalcor to pay the bills for preliminary construction work being done at the site.
A portion of that money will be used for oil and gas investments by Nalcor, but the vast majority will go to the Muskrat Falls project.
That announcement was a reversal for Kennedy. At budget time in April, the government set aside more than $600 million for Nalcor, but said that money would only be touched if the project was sanctioned.
“If sanction is approved, then part or all of the money could be spent. If not, then it won’t be spent,” Kennedy told The Telegram in April.
“If the project isn’t sanctioned then the money won’t be utilized — at least not for the Lower Churchill,” Kennedy said.
But Tuesday, he said Nalcor couldn’t wait.
Kennedy said Nalcor is building a road to the site, and if it doesn’t continue with that work now, there’s a real chance that it will lose a year as a result of the Labrador winter and be put way behind schedule.
Kennedy told reporters that despite the expenditures, the project is by no means a done deal. At the same time, though, he said Nalcor officials are telling the government this is work that needs to be done and money that needs to be spent.
“I certainly understand people’s concern there, and we’ve hired experts to deal with this matter,” he said. “While the concern is certainly valid, we also have to follow the advice given to us by experts. Mr. Martin and Nalcor officials indicate to us that we need to build this road or we’ll lose a year.”
Looks like a ‘done deal’
Liberal Leader Dwight Ball said from his vantage point, it certainly looks like the whole thing is a done deal.
“The actions of the government certainly suggest it’s a done deal when you see money, you know, just being transferred like this at a request from Nalcor,” he said.
New Democrat Leader Lorraine Michael, on the other hand, said she’s skeptical about whether the project will go ahead, because of continued delays when it comes to the province’s efforts to secure a loan guarantee from the federal government.
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“Until we know if we have a loan guarantee, we have no idea if this project is going to go ahead or not,” she said.
“If we don’t get a loan guarantee, they’re in big trouble.”
Michael was also spending a lot of time during question period in the House of Assembly talking about Muskrat Falls. She said she wants to see a cash-flow analysis on the project examining costs and revenue streams. She said such an analysis was recommended by the joint-review environmental assessment panel before the government proceeds with the project.
“I find it very disturbing, really, because I think it’s absolutely essential that if a project is going to be approved that you know all the details of revenue and expenditure,” she said. “It was so important that the environmental assessment panel made it its No. 1 recommendation.”
Kennedy said nothing specific has been made public, partly due to the fact that there’s commercially sensitive information involved, but he assured reporters that the government has, in fact, examined the cash flow structure of the project.
“Nalcor has been in discussions with the bond-rating agencies in terms of the grade to be assigned to this project for borrowing money, and the bond-rating agencies engage in a very strenuous review,” he said.
“Also, I can tell you one of the reasons that the federal loan guarantee has take a long time is that they have engaged in a very significant economic analysis looking at everything from costs as put forward by Nalcor to revenues to ensure the economic viability and financial feasibility of this project.”
Kennedy once again said that the Muskrat Falls project won’t get a final green light from the government until the federal loan guarantee is signed, sealed and delivered.
“There has been no sanction to date,” he said.
“The premier has made it clear that the federal loan guarantee has to be finalized before we move to a decision on sanction.”