09 April 2014

Major Muskrat Costs Missing #nlpoli

As of April 4, Nalcor was “still in the process of negotiating and letting some large contracts for the [Muskrat Falls] project.”

That’s the reply the Telegram got from Nalcor about missing the Muskrat financial update the company was supposed to issue at the end of March.

Haven’t got the information yet.


Well, that’s a bit troubling in itself, given that Nalcor is supposed to be reporting monthly to the provincial government on project costs.  So if Nalcor is telling the provincial government that sort of information they can tell the people who are paying the bills – the local taxpayers – the same information, without any deletions or omissions.

And if the provincial government had any stones, they would insist that the Nalcor board not deliver any bonuses to the president and the corporation vice presidents until the company sorts out its financial reporting.  Ed, Gil, and Dawn would be spitting out real numbers  pretty damn fast if someone actually held them accountable.

No one should hold their breath waiting for that, of course.  At least, not any time soon.

Anyway, if Nalcor won’t report its costs accurately and on time, here’s a little tidbit to hold you over.

astaldi muskratAstaldi is the company that won the tender last year to build the Muskrat Falls dam itself. The company and Nalcor valued the contract last fall at CDN$1.0 billion.

You can see that in the screen capture from Astaldi’s 2013 year-end financial report, released at the end of March.

The company reported the CDN$1.0 billion figure as well in its third quarter report released last November. There’s also a mention of payments on Muskrat Falls that would come before the end of Astaldi’s fiscal year:

Payments expected from Italy (Rome Subway Line C, Milan Subway Line 5) and Canada (Muskrat Falls Hydroelectric Project) are forecast to decrease net debt levels by year end to approx. €800mn [from 896 million]

Lovely stuff.

But hang on.

What’s the exchange rate on the Euro these days? 

Well, friends, if you plug that 822 million Euro valuation Astaldi gave the project into a currency converter you find out that it works out to CDN$1.24 billion, or 24% more than the project’s face value at the time Nalcor announced the tender award last October.

That’s a hefty cost increase in a very short space of time. Now Nalcor has something else to explain besides just why they are tardy – yet again – with their project reporting.