ST. JOHN'S, N.L. — A trio of now-retired government bureaucrats say they were aware the estimated capital cost of the Muskrat Falls project was up in 2013. They remember $6.5 billion — $300 million over what had been publicly announced in 2012.
Former deputy minister of Finance Donna Brewer was the first on the witness stand at the Muskrat Falls Inquiry on Monday.
The questions for her set the scene: November 2013, less than a year after the hydro megaproject was green lit. Final financial arrangements were still being settled.
Brewer, Paul Myrden and Paul Morris were involved in different ways on what is known as financial close. Myrden was a director in Finance, experienced with the markets and provincial debt. Morris was an assistant deputy minister of Natural Resources, who reported to the associate deputy minister Tracy English (who, in turn, reported to deputy minister Charles Bown).
Up the ladder were former Finance Minister Tom Marshall and Natural Resources Minister Derrick Dalley. Marshall, Dalley and Bown have all said they don’t recall being told at the time the project was at $6.5 billion.
Commissioner Richard LeBlanc asked Brewer why no one from Finance went directly to the minister, to hammer home the increase.
“Because I think, as I indicated, even though I can’t recall exactly, I do recall the discussion of — that when you look at the total project cost and you look at the cost to the taxpayer, there was significant benefit in the financing that was going to be achieved,” she said.
LeBlanc told Brewer she could talk about benefits “until the cows come home,” but there was a hard reality the cost estimate for the construction was up.
“Was there ever advice given to the minister, or to the premier, or anybody else that, hey, maybe we better just put the brakes on for a bit, and just sort of — just have another look at this?” LeBlanc asked.
Brewer said the project was already sanctioned, still preferred over an alternative. The public cost was still just an estimate.
“And the direction, through the government, was to get this done,” she said.
Paul Myrden worked side-by-side with Nalcor’s finance team on the financial close, at a rented space on Barnes Road. Following Brewer to the stand, he testified the cost estimate just wasn’t his task to deal with. He described “noise” and a “lot of talk” around the headline number.
“My capacity to engage on that or to do anything about it was non-existent,” he said.
He couldn’t say who in Finance would have been tracking it.
Myrden said he expected someone from Natural Resources to keep track and challenge the number as needed. For him, it was a number to plug in — especially after it was agreed by all parties the federal government’s independent engineer would review and approve the final number going into the agreements.
“I was asked to look at the federal (loan) guarantee as it related to project financing and I did what I was asked to do,” Myrden said.
He said he forwarded information to Brewer, but couldn’t recall discussing the capital cost with the minister.
Paul Morris said Finance was the lead. He said he became aware $6.5 billion (or thereabouts) was going to be the number in the final documents. He said it was his practice to forward key information up the line, but he could not say with 100 per cent confidence his minister was fully informed at the time.
While there were references in emails and notes to $6.5 billion, Morris didn’t recall conversations from the time. Asked if he even had talked to Myrden and Brewer about the change in cost, he said he couldn’t recall.
Muskrat Falls project financing documents were signed Nov 29; bonds were priced Dec. 10 and funds advanced Dec. 13, 2013. Half a year later, the first public cost update put the capital cost at $6.99-billion. With subsequent increases, it currently sits at $10.1 billion.
Twitter: @TeleFitz
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