Nfld. & Labrador

Nalcor, Astaldi reach 'bridge agreement' for Muskrat Falls project

Nalcor Energy says it has negotiated a 'bridge agreement' with Astaldi to continue work on the powerhouse and intake at Muskrat Falls this year.
Work is continuing on the Muskrat Falls project, with spillway gates opened for the first time on Tuesday. (Nalcor)

Nalcor Energy says it has negotiated a "bridge agreement" with contractor Astaldi to continue work on the Muskrat Falls project this year.

"This agreement lays out firm production targets, expectations of the contractor, and financial incentives over the next several months to continue construction progress on the powerhouse and intake at Muskrat Falls," Nalcor revealed in a news release Thursday.

"This is a positive step," said Nalcor CEO Stan Marshall. "As long as the contractor meets our performance expectations, we are willing to work with Astaldi and continue negotiations."   

Marshall said Nalcor and Astaldi will try to reach a final commercial agreement by the end of 2016 to complete the remainder of the work.

In June, Marshall said Astaldi was partly to blame for cost overruns on the Muskrat Falls project, adding the Italian company had little experience working in a cold, northern climate.

Astaldi, in turn, demanded hundreds of millions in additional payments from Nalcor.

The original contract was worth roughly $1.1 billion, and Marshall acknowledged June 15 that the company was asking for hundreds of millions more.

Marshall said Thursday that details of the bridge agreement are confidential. But the cost of continuing to do business with Astaldi had been reflected in 2016 cost estimates for the project. 

Those estimates were pegged by Marshall to be more than $11 billion, including financing, when he delivered the June update. 

Opening the spillway gates diverts water from the Lower Churchill at Muskrat Falls, allowing work to continue on the cofferdam. (Nalcor)

Construction at the Labrador site has been progressing. Nalcor announced Wednesday that it had reached a milestone as the facility's first spillway was put into operation.

The company said four of the five spillway gates were opened Tuesday afternoon, redirecting the flow of the Lower Churchill at Muskrat Falls for the first time. 

Completion of the cofferdam and full river diversion is scheduled in the coming weeks, said the company in a statement on its website.