UPDATE: Muskrat Falls capital cost going up

Ashley Fitzpatrick
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Nalcor Energy not releasing details until all major contracts set

Nalcor Energy president and CEO Ed Martin said some costs relating to the Muskrat Falls hydroelectric project are running higher than expected and suggested the overall timeline for the project is likely to change, but provided no further details today at Hydro Place in St. John’s.

In a roughly hour-long briefing with reporters — meant to frame the release of an independent engineers’ report by MWH Americas — Martin was asked question after question about overall project costs, cost overruns and individual contract costs.

While committing to providing an updated, overall cost estimate on the project at some point later this year, he would not commit to having the number by the time the Crown corporation holds its annual general meeting in June with its public question and answer period.

Martin committed to providing a “full picture” of the Muskrat Falls project when a detailed update on costs is provided at some point later this year, but would not commit to providing the estimated cost or overruns for any one contract.

He committed to explaining the reasons for cost overruns arising as the megaproject moves forward, but would not commit to providing the exact amount or even ratios by which contracts run over cost — but added he would confer with the project leaders on that point, to see what information could be released.

“On the $6.2-billion, we are feeling some cost pressure. And I can’t go into too much detail on that, because I want to get past, as I mentioned, finalizing the various cost parameters,” he said

He went on to note that productivity costs, particularly on large contract work in the province, are a consideration.

“There will be an increase on the $6.2 (billion),” he said, adding other cost considerations are in terms of project financing and the full picture include the savings from the federal loan guarantee. But the capital cost number is going up.

The $6.2-billion figure is the standing estimate for the construction, not including the Maritime Link to Nova Scotia.

Meanwhile, a key factor in the federal government’s awarding of a loan guarantee for financing of the Muskrat Falls hydroelectric project was a review of the project site, plans and estimates by an independent engineer.

Nalcor Energy released the report today, after obtaining approval from the independent engineering company - MWH Canada - and from the federal government, who have ownership of the report.

Martin said some information, considered commercially sensitive, was removed prior to the report’s release, but those redactions will be revealed as time and project work allows.

The report was provided to reporters in a paper copy after the fact and is being posted online at the website for the project. Martin said it is the report used by the federal government in making the decision for the loan guarantee.

The Telegram is now reviewing the roughly 200 pages of documentation.

In the legislature, question period started off with the Liberals pressing the government about Muskrat Falls.

Liberal Leader Dwight Ball wanted to know more information about delays in the project schedule and cost overruns, which Nalcor CEO Ed Martin hinted at.

Natural Resources Minister Derrick Dalley wouldn't say if the government is changing it's plan to have first power in 2017.

Dalley said if there are any changes to the project schedule, it'll be to save money.

•••

(Earlier story)

Nalcor releases Muskrat Falls engineer's report

A key factor in the federal government's awarding of a loan guarantee for financing of this province's Muskrat Falls hydroelectric project was a review of the project by an independent engineer.

Nalcor Energy has announced the public release of that engineer's report today, paired with a briefing for reporters at Hydro Place in St. John's, beginning shortly before 11:30 a.m.

Ed Martin, Nalcor Energy's president and CEO, said approval was sought from the independent engineer - MWH Canada - and from the federal government before the report was released.

He added some information, considered commercially sensitive, was removed prior to the report's release, but those redactions will be revealed as time and project work allows, Martin said.

More to come.

Organizations: Nalcor Energy, Hydro Place

Geographic location: St. John's

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Comments

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Recent comments

  • Tony Rockel
    April 16, 2014 - 08:54

    According to Tom Marshall, NALCOR is "the people's company". So what gives these arrogant fools the right to play fast and loose with our money without being obliged to tell us what they're doing with it?

  • Corporate Psycho
    April 15, 2014 - 20:38

    Stop MF now.

  • Duffy
    April 15, 2014 - 17:33

    This CEO (Martin) will go down in history with his buddies in the Conservative Party (Danny and Kathy) as being the ruination of Newfoundland. The Province will be declaring bankrupsy by 2020. God Save us from the ones who will destroy us and our way of life.

  • Guy Incognito
    April 15, 2014 - 16:17

    Ed Martin's name will rightly go down in infamy with Cathy Dunderdale's, Jerome Kennedy's, Tom Marshall's, and King Williams'. Just starting the Muskrat Falls project and he is already "feeling the pressure" from cost overruns. I used to love living here..............

  • Cost Over-runs aren't warranted in an economy that hasn't even started to percolate!
    April 15, 2014 - 15:56

    There is nothing in today's economy that would warrant cost over-runs in any of the few mega projects that are on- going in North America. The Debt ridden United States's economy hasn't even begun to percolate one iota since the Great Depression of 2008 struck down the Group of G21 economies, and the US economy is Canada 's number one trading partner, which it does 73 per cent of its trade with. These cost over-runs are concocted by those with the contracts to the Muskrat Falls Project and they are not warranted. In my opinion this is a bunch of multi-millionaires who got together a few times and dreamt up how this project will come down the chute; and come Hell or High Water they want what they bargained for, no matter how LOW the economy is percolating. They weren't expecting the electorate of Newfoundland and Labrador to wake up and find out for themselves what they were about to be embedded in without having any input into the matter.

  • Mawell J.
    April 15, 2014 - 15:04

    I remember the antics of a devious friend who convinced his naive, nervous girlfriend that (what was then) the new Space Mountain ride at Disney was no big deal. He coaxed her past the signs warning anyone with a bad heart to turn back. Strapped in the seat in front of him, he patted her on the shoulder reassuringly as the cart made its way slowly to the top in the pitch black interior. 'See Babe', he said, 'nothing to it'. It was in those last few seconds atop the apex, when the warning lights began to flash and a voice from nowhere told her to keep her hands inside the cart, that she began to question his truthfulness. In those terrible minutes on her way back to earth, she would empty her stomach once, purge her bowels twice, and go unconscious three times. Shortly after, she found herself a new boyfriend and he went to work with NALCOR.

  • Tony Rockel
    April 15, 2014 - 14:56

    Well, Mr Dalley, here's a way to save money-- just call the whole ridiculous thing off!

  • Charles
    April 15, 2014 - 14:38

    To much talk concerning this project, SHUT it down, Clean the house from the top down. Plain and simple.

  • Scared or What?
    April 15, 2014 - 14:25

    How's that old saying go again? A picture is worth 6.2 billion words?? do the boys look worried or what?

  • Scared or What?
    April 15, 2014 - 14:23

    How's that old saying go again? A picture is worth 6.2 billion words?? do the boys look worried or what?

  • Jon Smith
    April 15, 2014 - 13:03

    Is the 5 billion loan guarantee to NL in place ( if not what is holding it up)? If yes, will the truckloads of cash ( 700 million) as sent over to Nalcor in the recent provincial budget have to continue for the budgets in years coming.

  • Curious
    April 15, 2014 - 12:29

    What percentage over the estimated costs are they at this point?

  • Little Man Dan
    April 15, 2014 - 12:28

    Shhhhh! you're not supposed to tell them; it's my legacy project and I said it was ok. Tell them to stop asking questions; it worked for me.

  • Torey Nomore
    April 15, 2014 - 12:17

    Martin's cost estimates for MF will be off by as much as Premier Marshall's budgets over the years. Reason number 87,442 that I cannot vote Tory no-more.

  • Jim
    April 15, 2014 - 11:52

    I'd say don't quit your day job Tony but people are lucky you did. Get a life man

    • Tony Rockel
      April 15, 2014 - 14:33

      Well, Jim, whoever you are, if you can't see what's wrong with this mega scam, then YOU'RE the one who needs to get a life.

    • Tony Rockel
      April 15, 2014 - 14:39

      Well, Jim, whoever you are, if you can't see what's wrong with this mega scam, then YOU'RE the one who needs to get a life. I'm very happy with mine, thank you.

    • Tony Rockel
      April 15, 2014 - 14:48

      Well, Jim, whoever you are, if you're incapable of seeing what's wrong with this mega scam, then YOU'RE the one who needs to get a life and also a BRAIN.

  • Tony Rockel
    April 15, 2014 - 10:21

    He added some information, considered commercially sensitive, was removed prior to the report's release, but those redactions will be revealed as time and project work allows, Martin said. ---Yes,when the culprits are long gone!