Lorraine Michael Question Period (12.10.2012)

MR. SPEAKER: The hon. the Leader of the Third Party.

MS MICHAEL: Thank you very much, Mr. Speaker.

Section 4.11 of the Muskrat Falls federal loan guarantee clearly notes there cannot be a change of control or sale of Nalcor, but not so the subsidiaries that will soon be created. Section 4.11 is open to the possibility that Muskrat Falls can be privatized and sold. The response of the Minister of Natural Resources last week to our concerns over that section was to say, sale of Nalcor subsidiaries will not happen and that everything is safe.

Mr. Speaker, I ask the Premier: Can she guarantee that Muskrat Falls will not be privatized?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER DUNDERDALE: Thank you, Mr. Speaker.

Mr. Speaker, as was noted here in the House last week, what you see in our loan guarantee document is normal, commercial arrangements. When you go to borrow money, to build an asset, Mr. Speaker, the asset is put there against the loan. So, unless there is some catastrophe in Newfoundland and Labrador and everybody decides not to pay their light bills, Mr. Speaker, in that circumstance we might lose the generation facility. I cannot imagine who will buy it with nobody paying their light bills, Mr. Speaker. Only under that extreme circumstance would we lose control of the generating facility.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The Leader of the Third Party.

MS MICHAEL: Thank you, Mr. Speaker.

Section 4.11 of the federal loan guarantee makes a clear distinction between the sale of Nalcor and the sale of its subsidiaries. The language in that section could not be clearer. A sale could happen after the people of this Province have paid for Muskrat Falls. That is in that section.

I ask the Premier: Why did she agree to a contract that could allow Emera the chance to buy part or the whole of the Muskrat Falls Project? It does not say in extreme circumstances in that section, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Finance and President of Treasury Board.

SOME HON. MEMBERS: Hear, hear!

MR. MARSHALL: Mr. Speaker, this project is going to be undertaken by subsidiaries of Nalcor and subsidiaries of Emera. What they are going to do is they are going to borrow money; that is the debt part of the deal. The debt equity ratio, the debt part is going to be taken on by these subsidiaries. The debt is going to be non-recourse to Nalcor. It is going to be non-recourse to the Government of Newfoundland and Labrador.

The provincial government, we will put in our equity. We will put in what is called a down payment. We will put in our equity contribution. We utilize those funds; we utilize some from cash flow and some from debt. The revenues that will be generated by that project will service the debt of that project. The dividends will then come to us and the dividends will be used to pay down any debt that we take on.

Mr. Speaker, we estimate the dividends that will come to us will average about $480 million a year over the fifty years of the project.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The Leader of the Third Party.

MS MICHAEL: Thank you, Mr. Speaker,

Mr. Speaker, clause 4.11 is an out clause. This government is prepared to unload Muskrat Falls when the cost becomes unbearable for this Province, which they will.

Mr. Speaker, I ask the Premier: Did Emera or did this government ask for clause 4.11 to be written into the loan guarantee?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Finance and President of Treasury Board.

SOME HON. MEMBERS: Hear, hear!

MR. MARSHALL: Mr. Speaker, the revenues that will go into Nalcor and Emera will pay off the cost of operating those assets, the cost of constructing the project. There is also a return that goes to the equity holder. I just indicated that we will receive, on average, dividends of about $450 million a year over the fifty years; on average. That is about $20 billion over the fifty-year life of the project. I think we are going to do very well, and I do not think we are going to have to ever worry about losing that project. That project is going to provide stable and fair electricity rates to the people of this Province for over 100 years.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Leader of the Third Party.

SOME HON. MEMBERS: Hear, hear!

MS MICHAEL:Thank you, Mr. Speaker.

So now this government cannot only talk thirty years in the future and forty years in the future, it is 100 years now.

Mr. Speaker, the Premier has signed a loan guarantee which has benefits for the people of Nova Scotia, benefits for the shareholders of Emera –

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

MS MICHAEL: – and ironclad protection for the federal government. By removing the protection of the PUB, the Premier has ensured the only group who stands to suffer on this agreement will be the people of the Province.

Mr. Speaker, I ask the Premier: How could she present such a shameful deal to the people of Newfoundland and Labrador?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER DUNDERDALE: Thank you, Mr. Speaker.

Mr. Speaker, this is unbelievable. It is absolutely unbelievable that a commercial term sheet is no better understood than this one obviously is here in the House of Assembly, Mr. Speaker.

Mr. Speaker, Nalcor is protected. The subsidiary will hold the asset and it will hold all the debt, not Nalcor, Mr. Speaker. Mr. Speaker, not only will we earn enough money to pay off the debt, the government itself will earn $450 million, plus it will grow every year for the term of the project. Not only will we be able to pay off the asset, Mr. Speaker, we will earn hundreds of millions of dollars from Muskrat Falls.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Leader of the Third Party.

SOME HON. MEMBERS: Hear, hear!

MS MICHAEL: Mr. Speaker, just a little bit of a different topic, but I ask the Premier: Is this government ready to table the legal costs to the people of this Province for their bid to try to get Abitibi to pay for the site cleanup of Grand Falls-Windsor?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER DUNDERDALE: Absolutely, Mr. Speaker, because the repercussions of the ruling of the Supreme Court apply not only to Abitibi. They have implications for other industrial sites that may be in bankruptcy protection now or in the future, Mr. Speaker. We have to ensure, Mr. Speaker, that we do not get left with the same mess as we did in mining until we introduced the right, appropriate legislative measures to ensure that companies were responsible for their own clean up.

Mr. Speaker, I point out to the Opposition parties again, that we did not expropriate Buchans, we did not expropriate Botwood, we did not expropriate Stephenville, but we will be responsible for all of the clean up.

Associated Caucus Members: 

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