Canada’s controversial 824-MW Muskrat Falls hydroelectric project moved one step closer toward becoming a reality last week as Prime Minister Stephen Harper announced a federal loan guarantee.
Support for the Muskrat Falls hydropower plant — promised by Harper through his election campaign last year — is included in a term sheet that guarantees up to US$6.3 billion in debt over 35 to 40 years for the financing of the project.
The guarantee will be managed by Natural Resources Canada, with the government acting as an advisor to ensure that “the support provided to the projects is financially responsible to Canadian taxpayers”.
“I want to emphasize that this project is going to be a real game-changer for this province and this region,” Harper said. “What the federal government is doing under this agreement is providing a loan guarantee at extremely low risk, and frankly, I think in the long term, zero cost to the taxpayers of Canada.”
The $6.3 billion loan guarantee will lower borrowing costs for the $7.4 billion hydropower project, though Newfoundland and Labrador will have to make other arrangements for the $1.1 billion difference.