3rd federal loan guarantee finalized for Muskrat Falls

Financing has been secured for Ottawa's thirdloan guarantee propping up thedelay-plagued Muskrat Falls project.

In a news release sent Thursday morning, Newfoundland and Labrador HydrosaidCIBC hasunderwritten a $1-billion loan, guaranteed by the Canadian governmentfor the project.

The crown energy corporation's releasesaid CIBC hasbankrolled the loan through a series of 21 bonds with an effectiveaverage interest rate of 3.38 per cent.

The loan guarantee is part of a $5.2-billion bailout for theproject, aimed at staving off massive electricity rate hikes thatwould otherwise be necessary to pay bills that come due when theproject is producing at full capacity.

The deal was first announced in principle last July, and itincludes annual payments to the province equivalent to Canada's netrevenue from the Hibernia oil project off St. John's, which willtotal $3.2 billion.

Muskrat Falls was first approved in 2012 at a cost of $7.4billion, but the price tag had ballooned to $13.1 billion as ofSeptember 2020, and reports say it could still be a year before theproject is fully operational.