(St. John) Bank financing has been secured for a third Ottawa loan guarantee to support the massive Muskrat Falls hydroelectric project in Newfoundland and Labrador.
Posted at 12:22 PM
The county’s crown corporation said Thursday that CIBC has secured a $1 billion federally guaranteed loan for a delayed hydropower project.
Newfoundland and Labrador Hydro said in a press release that CIBC financed the loan through a series of 21 bonds at 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 increases in electricity prices that may be necessary to pay the bills that will be due when the project goes into full production.
An initial agreement between Ottawa and the county was first announced last July. The agreement provides for annual payments from Ottawa to the province equal to the net revenue that Canada earns from the Hibernia oil project, off Saint John, which would amount to $3.2 billion.
The massive Muskrat Falls project, located on the Lower Churchill River in Labrador, was first approved in 2012, at an estimated cost at the time of $7.4 billion. But the bill came to 13.1 billion in September 2020, while reports suggest there may still be a year before the project is ready to be fully operational.