HAPPY VALLEY-GOOSE BAY, N.L. – Prime Minister Stephen Harper has signed off on a long-awaited federal loan guarantee for the $7.4-billion Muskrat Falls hydroelectric project in Labrador.
The federal backing, which Harper promised during last year’s election campaign, is expected to save the governments of Newfoundland and Labrador and Nova Scotia more than $1 billion in borrowing costs.
The agreement signed Friday guarantees up to $6.3 billion in debt for the financing of the project for a period of 35 to 40 years.
“I want to emphasize that this project is going to be a real game change for this region and this province,” Harper told a news conference at the 5 Wing Goose Bay airbase in Happy Valley-Goose Bay.
Harper also congratulated Nova Scotia Premier Darrell Dexter and Newfoundland and Labrador Premier Kathy Dunderdale, whose determination on the loan guarantee he called “relentless.”
Dunderdale said Muskrat Falls is the key to “a sustainable, prosperous future” that will allow her province to harness more of its energy resources at the lowest cost to the province’s residents and businesses.
Dexter said Muskrat Falls will provide secure reliable energy in a province where many families struggle to pay heat and light bills.
Dunderdale’s government has waited for the federal support before sanctioning Muskrat Falls, which is expected to happen before the end of the year.
If it goes ahead, Muskrat Falls would be the largest single public expenditure in Newfoundland and Labrador’s history, costing almost as much as its annual budget.
It is expected to begin generating power in 2017, and some of that electricity would flow to Nova Scotia through subsea cables.
Opponents have said Dunderdale has not proven the case for Muskrat Falls, accusing her of expediting a project without debate that could burden future generations with a heavy debt.
But her government has countered the criticism by releasing a series of reports in recent weeks that conclude the project is a viable, clean source of renewable energy that’s needed to wean the province off fossil fuels.
If it proceeds, Muskrat Falls would be capable of generating up to 824 megawatts of electricity, 170 megawatts of which would go to Nova Scotia annually for 35 years. That would serve about 10 per cent of that’s province’s power needs.
The development is a joint venture between Nalcor Energy, Newfoundland and Labrador’s Crown utility company, and Nova Scotia private utility Emera (TSX:EMA).
Nalcor Energy would be responsible for the construction of the dam and power station in Labrador as well as transmission lines on the island of Newfoundland. That is expected to cost about $6.2 billion.
Emera would build subsea a 180-kilometre subsea link that would transmit the power from Cape Ray in southwestern Newfoundland to Lingan, N.S., in Cape Breton. That is expected to cost at least $1.2 billion.
Preliminary work on a road to the site near Happy Valley-Goose Bay has already started.
The project has been on the drawing board in one form or another for decades. In 1980, it passed an environmental assessment but was set aside due to market access and financing issues.