Today, the Honourable Andrew Furey, Premier of Newfoundland and Labrador, announced that the Government of Newfoundland and Labrador, Newfoundland and Labrador Hydro, and the Government of Canada signed term sheets for the $1 billion federal loan guarantee and capital restructuring for Muskrat Falls (MF) and the Labrador Transmission Assets (LTA), and the $1 billion investment by Canada in the province’s portion of the Labrador-Island Link (LIL). This is part of the Provincial Government’s Rate Mitigation Plan to ensure electricity rates will not double as a result of Muskrat Falls.
With the completion of these term sheets, a Request for Financing will be issued to obtain the best financing solution that optimizes the value of Canada AAA credit rating provided through the additional $1 billion federal loan guarantee. This is the same structure used for the 2013 and 2017 financing process.
The final agreements contemplated under the term sheets are substantively complete and will be signed in the coming months.
The financial restructuring will:
- Restructure financial obligations so as to reduce equity and debt related cash flows;
- Leverage the Government of Canada’s credit rating to keep financing costs low;
- Allow the Provincial Government to providing rate relief to island customers; and,
- Maintain Newfoundland and Labrador’s 100 per cent ownership of the Muskrat Falls and Labrador Transmission Assets, as well as control of the Labrador Island Link, all of which will generate long-term benefits beyond the term of the financial restructuring with Canada.
On July 28, 2021, Premier Furey and Prime Minister Trudeau announced an agreement in principle for the financial restructuring of the Lower Churchill Projects which will contribute to the sustainability of Lower Churchill projects over the long-term and reduce the province’s cost of financing. The Muskrat Falls Project includes construction of an 824 megawatt (MW) hydroelectric generating facility that will produce 5 Terawatt-hours annually, over 1,600 km of transmission lines across the province, and associated electrical equipment.
Quotes
“This is an historic deal for the people of Newfoundland and Labrador, and for all Canadians. It represents the strength of our federation, and the important things we can achieve by working together. We can all breathe a sigh of relief knowing our province will now have affordable power rates once Muskrat Falls comes online.”
Honourable Andrew Furey
Premier of Newfoundland and Labrador
“Supporting the Lower Churchill Projects will provide a reliable and long-term source of clean power for people in Atlantic Canada. By working together, both governments of Canada and Newfoundland and Labrador are helping to promote our province’s economic resiliency. Supporting this project, and others like it, will not only contribute to Canada’s plan to address climate change and affordability, but it will also have a positive impact and a lasting effect for Newfoundlanders and Labradorians for generations to come.”
Honourable Gudie Hutchings
Minister of Rural Economic Development and Member of Parliament for Long Range Mountains
“The deal to put the Lower Churchill Projects on sound financial footing is moving ahead, to the benefit of all Newfoundlanders and Labradorians. Our hydroelectric resources can help power Atlantic Canada, electrify our regional economy, and lead the fight against climate change. This deal positions us to do just that.”
Honourable Seamus O’Regan Jr.
Minister of Labour and Member of Parliament for St. John’s South-Mount Pearl
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Meghan McCabe
Office of the Premier
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meghanmccabe@gov.nl.ca
Luka Vujic
Press Secretary
Office of the Minister of Rural Economic Development
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Ian B. Cameron (he/him/il)
Director of Communications
Office of the Minister of Natural Resources
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ian.cameron@nrcan-rncan.gc.ca