Canadian Manufacturing

Muskrat Falls hydro megaproject likely to go forward despite soaring costs, delays

Newfoundland has already sunk more than $4 billion into $9.2 billion project



Construction of the center transition dam between the spillway and powerhouse at Muskrat Falls. PHOTO: Nalcore Energy.

Construction of the center transition dam between the spillway and powerhouse at Muskrat Falls. The work on the site is both behind-schedule and over-budget. PHOTO: Nalcore Energy.

ST. JOHN’S, N.L.—There’s little chance the troubled Muskrat Falls hydro project will be cancelled despite soaring costs and delays, says the new head of Newfoundland and Labrador’s Crown corporation Nalcor Energy.

“Substantial progress has been made, other commitments have been put in place—it’s very unlikely it will be cancelled,” Stan Marshal said May 13 during a conference call to update Nalcor finances.

“It’s very likely that there will be delays beyond our control.”

Still, Marshall said he’s keeping “all options open” as he assesses cost and schedule overruns for a full status update he hopes to deliver in late June.

He said that report will include “what I see as necessary changes at the very senior management level” to better control delays at the sprawling work site near Happy Valley-Goose Bay in Labrador.

The province has already spent more than $4 billion building the dam and power house on the lower Churchill River.

Adjustments could include replacing the major construction contractor, Astaldi Canada, Marshall said.

“We have an issue with them. We will hold discussions with them, and hopefully those can be resolved.”

Cost projections for the province have soared to about $7.7 billion from $6.2 billion, with first power delayed several months until 2018 or later.

The joint venture between Nalcor and Nova Scotia utility company Emera will bring power to the island of Newfoundland and on to Nova Scotia using subsea cables and overland transmission lines.

Emera is building the underwater Maritime Link for an estimated $1.6 billion.

A recent interim report by EY—formerly Ernst and Young—found problems with oversight and said Nalcor’s cost and timeline forecasts last September were “not reasonable.”

Former Nalcor president and CEO Ed Martin said April 20 he was voluntarily resigning to spend more time with his family.

The provincial Liberal government, which won power last fall after 12 years of Progressive Conservative rule, named Marshall as his replacement the next day.

Premier Dwight Ball has repeatedly promised a full public airing of Muskrat Falls costs and risks.

Related Posts from the network