Prime Minister Stephen Harper. — Canadian Press file photo
The Muskrat Falls project cleared a major hurdle today when Prime Minister Shephen Harper announced the long-awaited federal loan guarantee for the hydroelectric project.
Harper said the project is an "unprecedented opportunity" at a news conference in Happy Valley-Goose Bay.
The federal loan guarantee will lower the costs of borrowing for the proponents, with projected savings of over a billion dollars for ratepayers in Newfoundland and Labrador and Nova Scotia.
In a news release, Harper states that the governments of Canada, Newfoundland and Labrador, and Nova Scotia have agreed on the terms for a federal loan guarantee for the Lower Churchill projects.
He said hese projects will contribute to jobs, growth and long-term prosperity in Newfoundland and Labrador and Nova Scotia.
Harper was accompanied by National Defence Minister Peter MacKay; Peter Penashue, Minister of Intergovernmental Affairs and President of the Queen’s Privy Council for Canada; Premier Kathy Dunderdale; and Nova Scotia Premier Darrell Dexter.
“This loan guarantee will not only create jobs and economic growth for people in Atlantic Canada, but will also provide a stable and sustainable source of energy for the region,” Harper said. “The Lower Churchill projects will receive the support they need to move forward, which will have significant economic benefits as well as environmental gains due to a substantial reduction in greenhouse gas emissions.”
The federal government is prepared to guarantee project debt to help the proponents finance the following projects: the Muskrat Falls Hydroelectric Generation Station and three transmission projects (Labrador Transmission Interconnection, the Labrador-Island Transmission Link and the Maritime Transmission Link).
The Muskrat Falls facility is expected to generate 4.9 million megawatt-hours (MWh) annually. In addition to reducing up to 4.5 million tonnes of greenhouse gas emissions annually, which according to estimates is the equivalent of taking 3.2 million cars off the road, the Lower Churchill projects will result in an average of 1,500 jobs during each year of construction with peak employment during construction of approximately 3,100 people. They will also generate $1.9 billion in earnings for the people of Newfoundland and Labrador.
Harper and the two premiers signed the term sheet today.
The term sheet sets out the terms and conditions of the loan guarantee which will be formalized in detailed agreements. With the term sheet signed, the projects’ proponents will now be in a position to engage capital markets to plan and arrange the debt financing for the projects.
The agreement means Ottawa will guarantee project-related debt of up to $6.3 billion for the Lower Churchill River projects. The loan will be guaranteed for a period of 35 to 40 years from the time project debt is raised, which will apply to the construction and operating phases of the projects.