Tag Archives: Labrador

Muskrat Falls hydroelectric – Who buried the risk assessment report?

Muskrat Falls, Labrador. Site of a proposed hydro electric project by the governments of Newfoundland and Quebec. This is downriver from the Churchill Falls Hydro project in Labrador. Photo by Greg Locke © 2017 DCS Files

Muskrat Falls on the Churchill River, Labrador in 2006 before construction of an ill-conceived hydro-electric project by the government of Newfoundland and Labrador.  Photo by Greg Locke ©2017

ROGER BILL
November 25, 2017

ST. JOHN’S, Newfoundland — The man in charge of finishing the Muskrat Falls hydroelectric project on the Churchill River in remote central Labrador calls the venture a “boondoggle”. The Newfoundland and Labrador government has established a commission of inquiry to determine why the project is wildly over budget and years behind schedule. A good place for the Commissioner, Judge Richard D. LeBlanc, to start is to find out who buried the warning that there was a “very high risk” of a multi-billion dollar cost overrun barely four months after the massive project was green-lighted in December, 2012.

 

The warning came in the form of a risk assessment undertaken by SNC-Lavalin, the engineering company retained by the Nalcor Energy, the provincial government agency managing the project. SNC-Lavalin officials, who were responsible for construction management and procurement on the project, conducted the risk assessment when initial prices for some major construction elements came in well above the original estimates in the $6.2 billion December, 2012 budget. The experts at SNC-Lavalin warned their Newfoundland client the project could go over-budget by an additional $2.4 billion. The warning was buried for four years.

 

Some critics of the Muskrat Falls project argue that warnings were ignored long before 2013but when the SNC-Lavalin risk assessment finally surfaced in June of this year it was too much to ignore and according to Newfoundland and Labrador’s premier Dwight Ball too late to put the brakes on the project

 

 According to Nalcor Energy’s CEO, Stan Marshall, the Province is now staring at a total cost of $12+ billion to bring the megaproject in two years behind schedule and the Province wants Judge LeBlanc to inquire into “any risk assessments, financial or otherwise” and whether “Nalcor took possession of the reports” and “made the government aware of the reports and assessments”

 

Judge LeBlanc will find that, yes, there was a risk assessment done by SNC-Lavalin in April, 2013 and maybe Nalcor Energy took possession of it or maybe not, and according to the provincial Minister of Natural Resources in April, 2013, no, the provincial government was not made aware of the SNC-Lavalin risk assessment.

 

Ed Martin, former president and CEO of Nalcor Energy. Photo by Greg Locke © 2017

Ed Martin, former president and CEO of Nalcor Energy. Photo by Greg Locke © 2017

What is a matter of public record is the following: Ed Martin, Nalcor Energy’s CEO, parted company with the provincial government in 2016. Whether he was dismissed or resigned is still a bit of a puzzle, but he was succeeded by Stan Marshall, a very successful executive with the private energy company, Fortis Inc. Stan Marshall says he heard about the 2013 SNC-Lavalin risk assessment from a former SNC-Lavalin engineer, but could not find a copy of it in Nalcor Energy’s files. Finally, Stan Marshall says he asked SNC-Lavalin for a copy of the risk assessment, received it, gave it to the provincial government, and it was released by the Premier and Minister of Natural Resources on June 23, 2017 (External Link to CBC story)

 

A spokesperson for SNC-Lavalin told The Telegram newspaper and www.allnewfoundlandlabrador.com that they “attempted” to hand over the risk assessment to Nalcor. Ed Martin, the former Nalcor CEO told the media the risk assessment was never “presented” to him. Premier Dwight Ball told the media that he had been advised that the risk assessment results were presented by SNC-Lavalin at a meeting attended by Nalcor officials including Ed Martin. Obviously, either Premier Dwight Ball has been poorly advised or Ed Martin is not telling the truth or the word “presented” has a very narrow and specific meaning in the world of engineers and consultants that outsiders fail to understand.

 

The expression “attempted to hand it over” makes one wonder if an official of SNC-Lavalin held the nine-page risk assessment document in their hand and reached out to give it to a Nalcor Energy official who refused to accept it. Or, maybe there was a meeting where the SNC-Lavalin, motivated by what is described in the risk assessment as a sense of “urgency” to convey their findings verbally briefed Nalcor Energy officials on the results of the risk assessment, but did not have the report in hand. When engineers are under oath and lawyers from Judge LeBlanc rather than journalists are asking questions about who told who what and who gave what to who then the people who will ultimately pay for the “boondoggle” will know who buried what.

 

What does not take any clarifying are the words of Tom Marshall, the provincial Minister of Natural Resources in 2013. When the SNC-Lavalin risk assessment surfaced in June, 2017. I asked Tom Marshall if he saw the risk assessment in 2013. He said, “I never saw that report.” Asked if he had been advised of the risk assessment findings Mr. Marshall said, “No.” Did he think Ed Martin, the Nalcor CEO who he met with regularly at the time, held back the risk assessment’s findings Mr. Marshall said, “That would be terrible. I can’t fathom if that is the case.” Would it have made a difference if he had known? “It would have rung all kinds of alarm bells”

 

Eleven months after the SNC-Lavalin risk assessment warning Tom Marshall’s successor as Minister of Natural Resources, Derrick Dalley addressed the House of Assembly to reassure members that the government’s oversight of the Muskrat Falls project was “robust.” Mr. Dalley said, “senior staff with the Department of Natural Resources and Finance have met regularly with Nalcor’s CEO and their staff. As well, the provincial cabinet has had regular meetings and ongoing reports from the CEO of Nalcor”

 

For those who gamble on political affairs the question Mr. Dalley’s assurances in 2014 raise is this; what are the odds that Judge LeBlanc will hear testimony from one single senior staff or cabinet member who met regularly with the CEO of Nalcor who will recall hearing the words, “SNC-Lavalin risk assessment” or “serious concerns” or “very high risk of cost overruns” in any of those meetings?

 

Two days later the Minister again sought to reassure the members of the House of Assembly that there was no very high risk of cost overruns, “Nobody is putting my signature on a paper that costs my children $6 billion and $7 billion into the future. I can tell you the work is done. The oversight is there” he said.

 

When the Muskrat Falls Inquiry releases its schedule of witnesses make a note of the date of Mr. Dalley’s appearance.

 

Copyright Roger Bill 2017

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New Liberal leader in Newfoundland

BLOG-LIBERAL-Dwight-Ball__GSL6539

ST. JOHN’S, Newfoundland – The Newfoundland and Labrador Liberal Party elected Dwight Ball as their new leader following an election designed to make it easier for more people to participate. Ball had been interim leader since Yvonne Jones quit to run and win in a federal by-election last year. The sitting member of the house of assembly, from rural Newfoundland, fought off four other candidates, two sitting MHAs, also from rural Newfoundland, and two high-profile business persons from St. John’s.

In a broad reaching attempt to open up the party, attract new members and extend the democratic process, the party opened the Nov. 17 leadership election to the public allowing people to sign up and vote online, over the phone or at the convention in the provincial capital.  Considering the rise in Liberal popularity, it also meant the public had the opportunity to possibly vote for the next premier of the province directly.

The Liberals signed up 38,006 new party supporters during the five-month leadership race, and more than 23,000 of those cast a ballot. Party president Judy Morrow said the next two years are all about turning that list into a province-wide organization going into the next election. This Liberal race also featured a preferential ballot with each eligible voter ranking their choices, from first to fifth.

The party was nearly wiped out when millionaire businessman and lawyer Danny Williams became premier under the Progressive Conservatives in 2004, and at one point nearly lost official opposition status to the New Democratic Party, which has enjoyed major growth in the urban ridings in St. John’s. Since the confederation debates of 1948-49 the political divides in the province have been traditionally rural Liberal vs urban Conservative with the Liberals being the party that brought Newfoundland into the Canadian confederation and St. John’s conservatives in the merchant and clergy classes, opposing it. Other than this historical footnote and a few oddities along the way, there is very little difference, ideologically, between the provincial parties.

 The performance of Williams’ successor, Kathy Dunderdale, has been underwhelming since she took over the premiers’ seat following Williams surprise resignation in 2010. Her polling numbers have led her to the dubious position of the least-popular provincial premier in Canada. This, and her government’s lackluster performance and general disorganization, has meant a resurgence of support for the Liberal party again and set the stage for the next provincial election in 2015. Until a recent attempted palace coup inside the New Democratic Party, that saw two of its five caucus members depart to sit as independents, the NDP stood a good chance of making significant gains in the Newfoundland and Labrador House of Assembly.

With possible leadership changes in the NDP and PC parties in the coming year the stage is almost set for the next election in Canada’s most eastern province.

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