In the House of Assembly on Monday, Premier Kathy Dunderdale said that the provincial government decided to seize assets of three companies in Newfoundland and Labrador in 2008 because it knew that one of the companies – AbitibiBowater - was working on a sale of some assets to other parties.
When we took a decision to expropriate Abitibi, it was something we had to do quickly, Mr. Speaker, because we knew the intention of the company was to sell the assets.
…
we decided that we would move quickly. We only had the weekend to prepare, but we all agreed that whatever risks were ensued…that it was the right thing to do and that our legislation should protect us
Tie that back to something SRBP reported previously:
In “a February 13 interview with Business News Network’s Howard Green, Abitibi chief executive David Paterson said the provincial government moved to expropriate AbitibiBowater’s assets in Newfoundland only after the provincial government lost out in the bidding for Abitibi’s interest in one of its hydro projects. [video link]
‘We hadn’t said we were going to sell the assets,” said Paterson, “other than we had a deal on a joint venture power dam and our partner [in that project] was going to buy us out…’.
"Paterson said the provincial government - presumably Newfoundland and Labrador Hydro - had bid for the AbitibiBowater interest in the joint venture but had been outbid by the partner. He said the provincial government had been “blocking the transfer” to what Paterson described as an existing investor in the province.
“and now they’ve expropriated them as well,” said Paterson.
That sounds like Star Lake, a project that wasn’t involved with delivering power to the paper mill in Grand Falls-Windsor. It’s also the only one of the hydro assets for which the provincial government has settled a compensation claim. Talks between Nalcor and Fortis over Fortis expropriated interest in other generation projects are reportedly still ongoing.
Note that in the 2009 interview, Paterson said the company was interested in developing other hydro-electric projects. Interestingly enough, the company had proposed developing a project at Red Indian Falls and Badger Chute with Newfoundland and Labrador Hydro. Former Abitibi public relations executive Roger Pike described the project this way in a November 2008 column in the Grand Falls-Windsor Advertiser:
Government spun the story as only governments can. They portrayed the company proposal as being one sided and greedy. It was spun on all of the open line shows with Abitibi painted as the villain. This simply wasn't true. Profits gained from the sale of the proposed hydro would be used to subsidize paper manufacturing in this province.
The communications, energy, and paper-workers’ union at Grand Falls-Windsor included another Exploits project in tis submission to the energy plan consultations in 2006. Altogether, the three projects could add 89 megawatts to the island’s hydro generation.
Pike wrote of the potential that a new team at the paper company would look to develop the project. At the same time, he noted that the provincial government wouldn’t be interested in it because the government’s focus was on the Lower Churchill. Less than a month after he wrote those words, the provincial government seized the hydro-electric assets along with timber leases.
A month after the expropriation, the provincial government announced an agreement with Vale on development of the Long Harbour project. The announcement included this statement:
The company has also agreed that it will pay the island industrial rate for its power supply, surrendering its option to have a better rate should other industrial customers obtain a better rate for whatever reason.
Vale didn’t have much of a choice, of course, given that Nalcor held a near-complete monopoly on electricity generation thanks to the expropriation. Otherwise, Vale might have been able to arrange a deal with AbitibiBowater for a supply of power from its Exploits generating assets.
-srbp-
