Government of Canada Announces Negotiations on Financial Restructuring of Lower Churchill Projects
February 10, 2020 - St. John’s Newfoundland and Labrador - Department of Finance Canada
The Government of Canada is committed to working collaboratively with provinces and territories to build an economy that works for everyone.
Today, the Honourable Seamus O’Regan, Minister of Natural Resources, on behalf of the Honourable Bill Morneau, Minister of Finance, announced that the Government of Canada has agreed to financial restructuring negotiations and will support short-term flexibilities for the Lower Churchill Projects in Newfoundland and Labrador in recognition of the province’s objective to protect ratepayers.
Canada has agreed to negotiate a financial restructuring to reduce the cost of the capital structure of the Projects, such that they are financially sustainable over the long term. These negotiations will look at options by which the province could monetize its assets such as expected income from the Labrador–Island Link. Both governments will work to be in a position to reach and implement an agreement by the time of the Projects' commissioning.
In the interim, the Government of Canada is allowing Nalcor and its subsidiaries to defer making payments into the Sinking Fund through the end of 2021 or until the Projects are commissioned, whichever comes first. Canada is also willing to waive requirements that Nalcor prefund any additional cost overruns into the Cost Overrun Escrow Account.
While Canada’s goal has been and remains to ensure successful completion of the Projects and to maintain their financial sustainability, these remain provincial Projects, in provincial jurisdiction, and the province bears responsibility to ensure they are delivered economically.
“Our government will continue to collaborate with the provincial government to support the people of Newfoundland and Labrador. We believe that a full restructuring of the Lower Churchill Projects is the best way to ensure the Projects are financially sustainable over the long term. I will continue to work with Premier Ball to realize that objective.”
Bill Morneau, Minister of Finance
“This is an important day for the people of our province. The Government of Canada and your Members of Parliament for Newfoundland and Labrador are determined to work with Premier Ball so that the provincial government can make the Lower Churchill Projects financially sustainable for ratepayers. We’ve got more work to do, and we’ll continue to keep at it.”
Seamus O'Regan, Minister of Natural Resources
The Lower Churchill Projects are a set of hydroelectric generation and transmission projects that includes the Muskrat Falls Generating Station on the Churchill River in Labrador, the Labrador Transmission Assets, the Labrador–Island Link that connects to the island of Newfoundland and the Maritime Link that connects to Nova Scotia.
Since the announcement of the Lower Churchill Projects in 2010, the Government of Canada has provided significant support, with federal loan guarantees to Newfoundland and Labrador totalling $7.9 billion. These Projects benefit Atlantic Canada’s regional electricity market and its significant potential to reduce greenhouse gas emissions in the region.
Media may contact:
Director of Communications
Office of the Minister of Finance
Office of the Minister of Natural Resources
Department of Finance Canada
Natural Resources Canada
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