Nfld. & Labrador

Muskrat Falls costs could climb by $400 million as construction gets back on track

Nalcor Energy says the construction and commissioning of its hydroelectric megaproject in Labrador, halted by COVID-19, will resume Saturday.

Work at Labrador site put on hold in mid-March due to COVID-19

This is the transmission yard at the Muskrat Falls site, seen in February. (Submitted by Nalcor Energy)

The head of Nalcor Energy says the delay in resuming construction at the Muskrat Falls site could end up costing an extra $400 million.

Work at the Muskrat Falls hydroelectric megaproject in Labrador will resume at the end of the month, after the COVID-19 pandemic brought construction to a standstill in March. CEO Stan Marshall told CBC News the Crown corporation has a duty to finish the project as quickly as possible.

"COVID has certainly significantly delayed the project, so the delay will increase the costs, and we have cash flow things coming up," said Marshall.

He says there's still a lot of uncertainty about how quickly work will move ahead and how much the delay — Nalcor estimates the project will be four months' behind schedule when work resumes — will add to the bill.

He estimates that the capital cost of the project will go up by $150 million to $200 million. The interest on the billions of dollars borrowed is also adding up, and could easily be another $200 million, he said. That could bring the total cost of the project from $12.7 billion to $13.1 billion.

Nalcor CEO Stan Marshall said the four month delay in construction added up to $400 million in extra costs to the project. (Terry Roberts/CBC)

The delays will also affect the province's finances. Marshall said there's a $200-million payment due in December, and since the project won't be finished, the province, not ratepayers, will have to find the money to pay that

Not business as usual on site

When construction work was wound down on March, there were 500 people on site. Marshall says with physical distancing and other changes, it will likely now be fewer than 300 people on site as work resumes.

"We can never go back to the way it was," said Marshall.

"Our first priority has to be the safety of the workers and the communities."

Installing turbines inside the Muskrat Falls generating station will involve bringing specialized workers in from outside the province, and the country (Submitted by Nalcor)

Workers will no longer be able to come and go from the site. They'll stay in the camp for the full two weeks, and then it will be a complete shift change with a new crew coming in.

Plan for out of province workers

Marshall says the work that's left — installing and commissioning the turbines, for example — will require specialized workers from out of the province.

Some will be coming from Quebec or Europe but they won't be allowed into the camp right away.

"We're  going to require that everybody coming in will be isolated in St. John's area for two weeks before they go to work," he said.

Marshall said he has been applying whatever pressure he can to unions to ensure that wherever possible local workers in Labrador are hired instead.

Slowly adding workers

Muskrat Falls went into "care and maintenance" mode in mid-March when the province enacted public health emergency measures to avoid the spread of COVID-19. 

Nalcor, a Crown corporation, said the workforce of more than 500 people on site went down to fewer than 100 people per rotation at Muskrat Falls and roughly 12 at Soldiers Pond, "the minimum required to monitor the facilities and perform safety functions" during the work stoppage. 

It's preparing both sides for the "safe and gradual" start to construction and commissioning. That means the numbers of workers at each site will slowly increase, as new protocols and guidelines for working safely are followed to protect workers from contracting the virus. 

The company expects there will be about 150 construction workers at Muskrat Falls and 80 at Soldiers Pond by the end of June, with up to 300 workers back at Muskrat Falls over the summer. 

Read more from CBC Newfoundland and Labrador

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