3rd federal loan guarantee finalized for Muskrat Falls
Guarantee is part of a $5.2-billion bailout to stave off massive rate hikes
Financing has been secured for Ottawa's third loan guarantee propping up the delay-plagued Muskrat Falls project.
In a news release sent Thursday morning, Newfoundland and Labrador Hydro said CIBC has underwritten a $1-billion loan, guaranteed by the Canadian government for the project.
The crown energy corporation's release said CIBC has bankrolled the loan through a series of 21 bonds with an effective average interest rate of 3.38 per cent.
The loan guarantee is part of a $5.2-billion bailout for the project, aimed at staving off massive electricity rate hikes that would otherwise be necessary to pay bills that come due when the project is producing at full capacity.
The deal was first announced in principle last July, and it includes annual payments to the province equivalent to Canada's net revenue from the Hibernia oil project off St. John's, which will total $3.2 billion.
Muskrat Falls was first approved in 2012 at a cost of $7.4 billion, but the price tag had ballooned to $13.1 billion as of September 2020, and reports say it could still be a year before the project is fully operational.