(Saint John) Bank financing has been secured for Ottawa’s third loan guarantee to support the Muskrat Falls hydroelectric megaproject in Newfoundland and Labrador.
Posted yesterday at 12:22 p.m.
The province’s crown corporation says Thursday that CIBC has taken out a $1 billion loan, guaranteed by the federal government, for the delayed hydroelectric project.
Newfoundland and Labrador Hydro said in a news release that CIBC funded the loan through a series of 21 bonds, with an average effective interest rate of 3.38%.
The loan guarantee is part of a $5.2 billion bailout for the project. The plan aims to save consumers from the massive hikes in electricity rates that would otherwise be needed to pay the bills that will be due when the project comes into full production.
A tentative agreement between Ottawa and the province was first announced last July. The agreement provides for annual payments from Ottawa to the province equivalent to the net revenues that Canada derives from the Hibernia oil project, off Saint John, which will total $3.2 billion.
The Muskrat Falls megaproject, on the lower Churchill River in Labrador, was first approved in 2012, at a cost then estimated at $7.4 billion. But the bill reached 13.1 billion in September 2020, while reports indicate that it could still be a year before the project is fully operational.