Ottawa is investing $5.2 billion in Newfoundland’s Muskrat Falls hydroelectric project.
Prime Minister Justin Trudeau has announced that the federal government will provide aid to the long-delayed, over-budget Muskrat Falls project ahead of a likely election this September.
Ottawa will take an equity stake in the hydro project and provide debt guarantees as part of a $5.2-billion restructuring agreement with the Government of Newfoundland and Labrador, which includes $2 billion in government financing.
The deal earmarks $1 billion for an investment in Newfoundland’s portion of the project’s Labrador-Island Link and a $1-billion federal loan guarantee for the Muskrat Falls dam and its transmission lines.
Costs for the Muskrat Falls project have soared to more than $13 billion, nearly double early projections. Wednesday’s deal also includes a federal government commitment to make annual transfers to Newfoundland to help the province mitigate a spike in electricity rates due to the project’s cost.
The latest funding marks another intervention by Trudeau’s government in the 824-megawatt dam on the lower Churchill River in the sparsely populated Labrador region. In November 2016, Ottawa guaranteed nearly $3 billion in debt for the project after costs ballooned from an initial estimate of $7.4 billion.
