Newfoundland and Labrador secures federal loan for 824-MW hydro project

The Canadian government, the government of Newfoundland and Labrador and Newfoundland and Labrador Hydro signed term sheets for a C$1 billion federal loan guarantee and capital restructuring for the 824-MW Muskrat Falls hydroelectric project.

The financing, announced Feb. 14 but first agreed to in principle in July 2021, provides a loan guarantee for the hydro facility and related transmission assets in Labrador. The agreement also includes a C$1 billion investment by Canada in the province's portion of the 1,100-kilometer Labrador-Island Link high-voltage direct-current transmission line connecting Muskrat Falls to the island of Newfoundland.

The move is part of the government of Newfoundland and Labrador's plan to ensure electricity rates will not double as a result of the Muskrat Falls project, the provincial government said.

Muskrat Falls and the related transmission infrastructure, which were declared complete in November 2021, ran far behind schedule and over budget. The Canadian federal government has previously offered help to the province, including guarantees on C$7.9 billion in debt and deferral of some debt payments.

The financial restructuring will help leverage the Canadian government's credit rating to keep financing costs low and maintain Newfoundland and Labrador's 100% ownership of Muskrat Falls, the Labrador transmission assets and the Labrador-Island Link, the provincial government said.

Final agreements are substantively complete and will be signed in the coming months, the federal and provincial governments said in news releases.