N.L. refinery could face delay as U.S. market tumbles
The embattled housing and financial sectors in the United States could put a kink in plans for a refinery at Placentia Bay, N.L.
Brian Dalton, a director of Newfoundland and Labrador Refining Corporation, had planned on raising $2.5 billion for the project through the debt market. He told CBC News he's now closely watching the markets, waiting for them to work their way out of the credit crunch.
| What is a credit crunch? |
|---|
| A credit crunch occurs when it suddenly becomes more difficult for consumers and businesses to borrow money at given interest rates, usually because lenders have moved their money to investments that are perceived to be safer. It's also referred to as a liquidity crisis. The credit crunch of 2007 began following a large number of defaults in the U.S. subprime mortgage market. The Bank of Canada, the U.S. Federal Reserve and other central banks injected tens of billions into the financial markets to boost liquidity and keep interest rates from creeping higher. |
"We're looking at this in six-month snapshots," he said. "I don't believe these kinds of things will correct themselves faster than that, but we'll watch it unfold and adjust our overall project schedule."
Construction work on the Placentia Bay site on Newfoundland's south coast was scheduled to begin summer 2008, and the refinery was to be up and running by 2011.
The possible delay has come as a blow for people in the Placentia area who were counting on 3,000 construction jobs and almost 1,000 permanent jobs at the refinery.
Dalton said a possible delay would not affect the project in the long run.
"What we're doing is riding out a bump in the market," he said. "This is not the permanent destination of the debt markets. Big projects will still get financed, just not this month."
Dalton said he expects the markets to take more hits in the near future, but he said he believes financing for the refinery will come through because of the high demand for another refinery on the Eastern Seaboard.