For 40 years I had the privilege of building one of the world’s largest debt-rating agencies — DBRS. I saw the backroom financials of top-tier organizations and governments and was able to examine and find patterns and make market-moving decisions.
Muskrat Falls’ debt will be the final straw that leads to rating cuts. Based on analysis of N&L’s financials, I see Muskrat Falls leaving the province’s decision-makers with two unviable choices: raise the price of electricity to 23 cents KWH from 13 cents today or raise taxes to cover the debt. The alternative is not much better; raising taxes would be a capitulation that the $8-billion Muskrat Falls debt is now a burden of the taxpayers, not electricity ratepayers’. But the reality is the taxpayer is as unable to shoulder this burden as the ratepayer.
Although the federal government has appeared at the negotiating table, there seems to be a real lack of interest or commitment to improving the economy in Newfoundland. The province remains badly penalized by the current equalization formula, which is designed to help poorer provinces attain tax revenue equal to the Canadian tax average. Simply put, Ottawa pays out to have-not provinces the extra tax revenue they would earn if their tax bases were closer to the national average.
Newfoundland should be annexed to New Brunswick and Labrador to Quebec I never understood why micro-provinces exists in the first place.
Quebec totally fucks over NL via Churchill falls agreem’t back in 1969. Quebec buys the power $2.57/MWh, sells it to the US for $52.00/MWh. No National media criticizing this kind of provincial cannibalism benefiting Quebec. And this deal goes to 2041
rexglacer Of course they are because they voted in the Liberals.
This is why government should not be in control of projects. If this was the private sector the project would be bound by financial health. Take a look at site C in BC and the Keeyask project in MB. Both have cost overruns and run by provincial government.
Again?
This is a bond-holder problem. The taxpayers/ratepayers will be unwilling to pay more and austerity is a non-starter. Be prepared to take a haircut....
Written by the man who commissioned a vanity musical about power projects in Newfoundland.
_libour_ Who votes lib every year?
SO ... what you're saying is public-funded megaprojects are unwise. That will upset your corporate masters, won't it? PS: You guys gonna give back Trudeau's media bribe money? NO? Gosh, that's surprising.
The oil is there . Abundance of Natural minierals This can be fixed.
Federal government never protected the grand banks to prevent destruction of the fisheries. The Upper Churchill falls deal should be null and void in the national interest. Pulp & paper could be revived to produce brown paper grocery bags and replace the damn plastic bags.