Spin is deliberately deceptive.
On Wednesday, the folks at Nalcor announced they had a new contract with Astaldi valued at more than $1.8 billion. Nalcor boss Stan Marshall told reporters and they all dutifully repeated the comment that the new contract would add "$270 million" more to the $11.4 billion estimated cost of Muskrat
Falls.
The original contract with Astaldi had a value of CDN$1.0 billion. Astaldi actually booked the contract at about CDN$1.24 billion. That was 2014. In its online account of the latest twist in the tale, CBC actually inflates the announced price of the original contract to the number Astaldi claimed in 2014. Make no mistake: Nalcor pegged the cost of the contract at $1.0 billion. Period.
By late 2016, after Nalcor disclosed that the company had completely screwed up the contract, Nalcor folks started to describe the original value of the contract as $1.1 billion and allowed that a "bridging agreement" meant Astaldi could earn up to another $150 million by meeting performance milestones on construction of the powerhouse.
So now we have a new contract that increases the original contract by $830 million, not the $270 figure Nalcor used to describe the increase in their most recent estimated cost of the whole project.
Why against $11.4 billion, $270 million sounds like nothing at all and it is precisely that deceptive comparison - dutifully repeated by every reporter on Wednesday - that Nalcor is relying on to mask the real magnitude of Nalcor's shag-up with the Astaldi contract. In truth, the new Astaldi contract is responsible for an 83% cost overrun on the contract price of the powerhouse and we are not done yet.
The original estimated cost of the dam and line to Newfoundland was supposed to be $5.0 billion. We are now more than double that figure and well on the way to tripling it.
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