Nalcor and Emera announced on Tuesday that they would miss the November 30 deadline to reach an agreement on building an electricity line between Newfoundland and Nova Scotia.
They will now take until the end of January 2012 to get it done.
But that’s not the only significant deadline they’ve missed.
The agreement with Ottawa on a loan guarantee had some key dates in it as well:
The Parties agree that time shall be of the essence in this agreement and will be bound by this agreement including the following timelines, unless otherwise extended by mutual agreement: on or before August 31, 2011 – announcement of the terms of this agreement; on or before November 30, 2011 or 8 weeks following access by the Government of Canada to the projects’ data room and detailed analyses and representations by credit rating agencies – agreement on term sheet for engagement with capital markets; and on or before financial close – completion of formal agreements for provision of the loan guarantee.
Translation:
- August 31, 2011: the terms of the agreement. They met that deadline.
- on or before November 30, 2011 or eight weeks after the federal officials get access to the Lower Churchill financial details: an agreement on a term sheet to take to the financiers.
- before financial close: completion of formal loan guarantee agreements.
Monday’s curious statement from the federal government and two provincial governments didn’t talk specifics about the agreement. It just said that they get together and talk about things every now and then. It also said that the three governments “will work together going forward on a guarantee that will be completed in a timely manner while ensuring that all due diligence is performed.”
But they didn’t put any firm dates on anything.
And they didn’t release an amended agreement with new dates, which is, in itself, as odd as the other deal released on Monday which also lacked signatures and dates and stuff.
It’s odd – you see – because if things have really been moving along so well then Nalcor should be able to work on the details of the loan guarantee with the federal officials. They should have been able to give the federal officials access to the financial information. After all, this project is supposed to be well along in the planning such that you’d figure Nalcor has a pretty firm idea on the financials for the whole project. The Nova Scotia link is just one part of the project.
Now this could be nothing much at all.
Or it could be that something else is rumbling below the surface. For example all those extra industrial and job bennys for Nova Scotia could be a sweetener to try and get more than a loan guarantee out of Uncle Ottawa.
Think about it for a second.
With the economy threatened by a foreign-induced slowdown, the federal government might be looking for a place for some specific stimulus that would stretch – inevitably – into central Canada.
They couldn’t put federal backing beyond a loan guarantee into a project that benefits one province. But a huge project that will benefit at least two provinces? Well, that’s a horse of an entirely different colour.
There’s even a mechanism in the form of the Lower Churchill Development Corporation, still left out there with enabling legislation on the provincial books. The Lower Churchill Development Act sets out a financial arrangement between the federal government and the Government of Newfoundland and Labrador. It always seemed odd that the current crowd running the place ignored this 30-odd year old agreement.
But still, even if that part wasn’t going on in the background, it is rather odd that the all-important loan guarantee didn’t get a more concrete endorsement than it did, especially for a massive project that is supposedly surging ahead despite all criticism and doubts.
- srbp -