Nfld. & Labrador

Ministers, not Marshall, made initial Muskrat Falls loan guarantee request

Two senior Newfoundland and Labrador cabinet ministers began lobbying their federal counterparts for greater assistance for Muskrat Falls at least six weeks before the request was made public by the new CEO of Nalcor Energy.

N.L. won’t provide details on when it went to Ottawa for extra help, or what province is seeking

The sun rises over construction on the Muskrat Falls project. The Newfoundland and Labrador government is seeking an enhanced loan guarantee from Ottawa to help deal with delays and spiralling costs. (Derek Doody/Submitted)

Two senior Newfoundland and Labrador cabinet ministers began lobbying their federal counterparts for greater assistance for Muskrat Falls at least six weeks before the request was made public by the new CEO of Nalcor Energy.

The Dwight Ball-led Liberal government has been grappling with ways to deal with spiralling costs at the megaproject since taking office less than a year ago, as overruns spilled into the billions and first power slipped further out into the future.

One of those measures is to seek more generous terms for a Muskrat Falls loan guarantee from Ottawa.

The first apparent public disclosure of those efforts appears to have occurred on June 24, at a press conference called by new Nalcor Energy CEO Stan Marshall to provide dire details on the troubled megaproject.

However, briefing papers provided to federal Natural Resources Minister Jim Carr on May 10 indicate that first contact had happened long before then.

"Earlier this year, both you and the minister of finance were approached by your respective provincial counterparts — the honourable Siobhan Coady, minister of natural resources, and the honourable Cathy Bennett, minister of finance — in order to seek amendments to the federal loan guarantee," noted the briefing material for Carr.

According to that document, obtained through access to information, Newfoundland and Labrador had asked for the removal of the $5-billion cap on the amount of debt guaranteed by Ottawa for the Nalcor-led projects.

The next several lines are blacked out because they could hurt federal-provincial consultations or deliberations, or reveal federal negotiating positions.

The briefing note was sent to Carr the day before Marshall officially took over as Nalcor CEO, and just weeks after former CEO Ed Martin and the entire Nalcor board resigned.

'Full details when we conclude our discussions'

The province won't answer questions about the loan guarantee request and the timeline associated with it.

A Natural Resources official sent a generic statement on behalf of Coady noting only that "discussions have been ongoing for a number of months" and "we look forward to providing full details when we conclude our discussions."

It's not clear why provincial officials are reticent to provide further details. No one answered a follow-up message.

Meanwhile, the feds steered inquiries about the details of the loan guarantee request back to the province.

Nalcor Energy plans to build one of two proposed Lower Churchill power plants at Muskrat Falls, outside Happy Valley-Goose Bay. (CBC)

Ottawa "is reviewing the request by the government of Newfoundland and Labrador and Nalcor to increase the amount of guaranteed debt that could be issued for the Nalcor-led portion of the Lower Churchill projects," federal Natural Resources spokeswoman Danica Vaillancourt noted in an emailed statement.

"The amount of debt currently guaranteed by Canada is capped at $5 billion for the Nalcor-led portion of the Lower Churchill projects. Under the existing agreements, it is the responsibility of Nalcor and Newfoundland and Labrador to cover any cost increases on the Nalcor-led projects."

She added that the feds "will continue to monitor the projects" and work closely with the province and project managers Nalcor Energy and Emera.

According to the latest estimates, the overall cost of Muskrat Falls has ballooned to $11.4 billion, including interest costs.

That's an increase of $4 billion compared to projections from four years earlier.

About the Author

Rob Antle

CBC News

Rob Antle is producer for CBC's investigative unit in Newfoundland and Labrador.