During his first appearance in a parliamentary committee after his appointment as head of the Caisse de depot et placement du Québec in 2009, Michael Sabia faced a full-scale attack from the then PQ MP Jean-Martin Aussant, who had wondered about the real loyalties of the new big boss of the woolen stockings of Quebecers. Mr. Aussant pointed to the attempt by the former CEO of BCE to sell the Montreal conglomerate to the Ontario Teachers’ Pension Plan, saying: “Someone trying to sell a flagship Montrealers in Toronto may not correspond to everyone’s interpretation of “the defense of Quebec’s interests”.
The declaration had brought this former senior federal official, born in Ontario, and grandson of an Italian immigrant who arrived in Montreal penniless at the beginning of the last century out of his hinges. “I will not accept your position, because I have an understanding of Quebec, I chose Quebec, I decided to work here with many other opportunities in Europe, the United States, Asia, but I decided to stay here to try to serve an institution that is important to Quebecers, insisted Mr. Sabia. So, yes, sir, as an allophone, I consider that I have deep roots here, in Quebec. »
Mr. Sabia’s reign at the Caisse between 2009 and 2019 is generally praised in Quebec’s financial and political circles. Arrived after the stock market crash of 2008, and left before the pandemic, he did not have to face a financial storm as important as these during this period. But he was able to turn around an institution whose risk management practices had been seriously questioned in the wake of the commercial paper crisis. And he was able to overcome the prevailing immobility to dare to propose his major light rail project, which became the Metropolitan Express Network (REM).
Admittedly, Mr. Sabia had promised us to deliver the REM without delays or cost overruns, promises which his successor had to renounce. But without his vision, we would probably still be discussing the construction of a light rail system in Montreal rather than complaining about the noise of the trains or the ugliness of the columns that line its path.
After a short stint in the federal capital as Deputy Minister of Finance, Mr. Sabia once again chose Quebec. His nomination at the head of Hydro-Quebec would only be a formality.
In 2009, when he was the Parti Québécois finance critic, François Legault was unimpressed by the choice of Jean Charest to lead the boat at the Caisse. He would have since fallen under the spell of Mr. Sabia, to the point of appointing him to this key position at the very moment when the state company begins a possibly stormy period.
There are many challenges facing the state-owned company, starting with its need to increase its production capacity while protecting its profitability. New production is expensive, while Hydro-Quebec has become a cash cow for the government and a lever for economic development thanks to its half-century-old dams that produce energy at low cost.
Make no mistake, Mr. Sabia’s main challenge will be to reach an agreement with Newfoundland on the renewal of the Churchill Falls contract, which expires in 2041. Hydro-Québec owes a significant share of its profitability to this contract dating from 1969, which allows it to buy more than 5,000 megawatts of electricity at a derisory price of 0.2 cents per kilowatt hour. While Hydro-Québec’s surpluses are dwindling, Churchill Falls energy has become more important than ever for the state-owned company.
In Newfoundland, public opinion is fiercely opposed to any new agreement with Quebec on Churchill Falls and to the construction of a new hydroelectric power station on the Churchill River, at Gull Island, in collaboration with Hydro-Quebec. However, the Legault government is counting on such an agreement to achieve a large part of its ambitions in terms of energy transition, including the electrification of transport. But Newfoundland’s distrust of Quebec is a major obstacle that would make it difficult for the province’s premier, Andrew Furey, to sell a new agreement with Hydro-Quebec to its people.
If there is a reason, above all other, for Mr. Legault to call on Mr. Sabia now, it is to extract him from this unfortunate situation. He is counting on Mr. Sabia’s negotiating skills, as well as the bond of trust he established with Mr. Furey and his officials as federal Deputy Minister of Finance, to reach an agreement that meets the of Quebec while being acceptable to the people of Newfoundland. The 15% refundable tax credit for the production of renewable electricity, announced in the last federal budget and of which Mr. Sabia would be the principal architect, will certainly help discussions on the development of Gull Island.
Mr. Sabia “is a Quebecer who loves Quebec very much,” said Mr. Legault on Friday, after meeting him recently. “While he was Deputy Minister of Finance in Ottawa, every weekend he looked forward to coming back to Montreal. »
The last I heard, Mr. Sabia is still deputy minister in Ottawa. But we understand that Mr. Legault seems in a hurry to announce his move to the head office of Hydro-Québec. He needs him.
Based in Montreal, Konrad Yakabuski is a columnist at Globe and Mail.