Nfld. & Labrador

Millions in lien claims target unpaid bills by Muskrat Falls contractor Astaldi

The principal contractor at Muskrat Falls, Astaldi Canada Inc., has failed to remit $7.8 million to benefit plans for unionized workers at the site, and owes a St. John's-based airline $4.3 million for flight services, according to liens filed against Nalcor Energy.

Trades council says $7.8M in pension, payments for workers not remitted; PAL Airlines owed $4.3M

The Muskrat Falls spillway and intake on the Churchill River, near Happy Valley-Goose Bay, Labrador, is pictured in this file photo. (Nalcor Energy)

The principal contractor at Muskrat Falls, Astaldi Canada Inc., has failed to remit $7.8 million to benefit plans for unionized workers at the site, and owes a St. John's-based airline $4.3 million for flight services.

That's according to mechanic's liens filed against against Nalcor Energy on behalf of those workers, and by PAL Airlines Ltd.

The Resource Development Trades Council (RDTC) filed the initial claim for a $7.8-million lien on Aug. 30, and amended it this week.

And on Monday, PAL also filed a claim for $4.3 million.

One source told CBC News Thursday that service providers at Muskrat Falls are "deeply troubled" by the situation.

The financial outlook for the contractor's Italian parent company has taken a hit recently. Earlier this month, a trio of ratings agencies — Moody's, Fitch, and S&P — all downgraded Astaldi.

It's the latest challenge to hit the Labrador megaproject, which is billions over budget, years behind schedule, and is now the subject of a commission of inquiry to try and determine what went wrong.

Cash not remitted for union benefits, lien claims

Astaldi Canada Inc. has deducted millions in pension, health, and other payments from the paycheques of unionized workers on the Muskrat Falls project, but hasn't remitted the cash to those benefit plans, according to the trades council's lien.

"Astaldi Canada Inc. has failed or refused to make all required deductions and has failed to make all remittances and other benefit payments due and owing to the lien claimants for benefit funds, health and welfare funds, training funds, pension funds, and other funds," the claim says.

The RDTC slapped the lien on the Muskrat Falls site, Crown-owned Nalcor Energy, and a Nalcor subsidiary.

A $7.8-million lien has been filed against Nalcor Energy by the Resource Development Trades Council. (Gary Locke/CBC)

Trades council president John Leonard declined comment, through the council's lawyer.

But in a publicly-filed affidavit, Leonard said the $7.8 million is an estimate of the outstanding payments for the months of July and August 2018.

The RDTC is the umbrella organization that represents 16 unions at the Muskrat Falls site.

Airline says it hasn't been paid since May

Meanwhile, PAL's tab for passenger and cargo flights to and from the Muskrat Falls site is growing.

Lien documents filed by the airline indicate that Astaldi has not made payments since May. According to sources, PAL continues to provide flight services.

Sources also say talks ongoing between Nalcor, Astaldi and service providers to try and rectify the situation.

Astaldi did not return phone messages left at the company's Labrador office on Wednesday or Thursday. There was also no response to emails sent to media contacts in Italy and the U.K.

The power house at the Muskrat Falls generation facility is pictured in this May 29, 2017, handout image. (Courtesy Nalcor Energy)

Meanwhile, Nalcor said in an emailed statement that it is aware of the lien claims, and is continuing to ensure that Astaldi "is paid in accordance with the requirements of the contract currently in place with them."

Nalcor added that it has performance securities — such as letters of credit and bonds — under the contract. It says that will provide financial protections if Astaldi doesn't meet its obligations under the contract.

Nalcor CEO Stan Marshall was not available for an interview, but a follow-up statement from Nalcor on Thursday said "Astaldi is continuing to work at site and performing as contracted and that is our focus at this time."

Premier Dwight Ball told reporters in St. John's he is confident that Nalcor's CEO will handle the situation with Astaldi, and get Muskrat Falls done.

Newfoundland and Labrador Premier Dwight Ball told reporters Thursday he is confident in the CEO of Nalcor Energy to handle the situation involving Muskrat Falls contractor Astaldi. (Eddy Kennedy/CBC)

"I'm not at all concerned when Stan Marshall is at the helm there of Nalcor right now," Ball said.

"He has the experience to obviously guide a way and get this project finished strong right now. We're nearing the final days now with Astaldi. So we leave those negotiations right where it belongs, and that's with the CEO of Nalcor."

Nalcor, Astaldi inked deal 2 years ago to finish project

Astaldi has the contract to construct the Muskrat Falls hydroelectric generation facility on the Churchill River in Labrador. This includes construction of the intake and powerhouse, spillway and transition dams, with an 824-megawatt generating station.

The original contract with Astaldi was valued at $1.1 billion, but the company asked for more money to complete the project several years ago because of delays and higher costs.

Nalcor and Astaldi reached a deal nearly two years ago to finish the work, beginning with a bridge agreement in 2016 that included an extra $150 million.

The final deal added another $600 million to the contract.

Nalcor says the overall completion for the Muskrat Falls generation site — including all contractors — stood at  88 per cent as of the end of August. Astaldi's construction scope was approximately 95 per cent complete at that time.

There are currently 650 people working for Astaldi at the Muskrat Falls project site.