Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Saturday, May 29, 2010

Upper Churchill Newfoundland - what needs to be undone

It is estimated that the Upper Churchill Hydro project has created roughly 22 billion dollars for Hydro Quebec to date. Newfoundland's share is about 1 billion. Not exactly a balanced deal. Let's face it, not even close. What is the real cost of this deal?

If you consider that Newfoundland is 11 billion dollars in debt, and a mere 50% share of the Upper Churchill would have Newfoundland without any debt, then you start to get the idea. The biggest problem with the Upper Churchill is not the damage that it has done so far, which is huge to Newfoundland's development, but where it leaves us for the future. Consider that the Lower Churchill development  is estimated to cost 7 billion - without the underwater cable transmission system. Then consider that the province is already 11 billion in debt. Then consider that there are only 500,000 souls in Newfoundland. Then consider that the population is aging faster than almost anywhere else in Canada. Then try not to consider the number of people that are leaving for the rest of Canada. Makes you wonder how Danny Williams copes!

The deal with Quebec has left Newfoundland starved of the revenue it needed to build the province up, and retain, if not grow, it's population. Yes oil has been developed, which has added to the provincial coffers, but likely won't undue by itself the damage of the last 40 years. Hard to get those years back.

Here's the kicker. Frankly, we aren't hearing the truth and the whole truth regarding the Lower Churchill development. The province of Newfoundland will likely not be able to do this project on it's own. Approaching financiers at this time, and in the state of our books, well let's just say we would not be the most attractive investment out there. The international bankers would view Newfoundland much the same as an extremely in debted family seeking a million dollar loan to start a business. Our largest resource is in the clutches of our biggest competitor for the foreseeable future. Oil is a good, but highly volatile resource given its cyclical nature and environmental concerns (the least of not being off shore drilling right now). They would likely say "we see where your going with this ...but, you have too high a debt to income...sorry". We need to prepare ourselves for this reality should we choose to let Hydro Quebec continue with its shabby deal.

Things are starting to look like they did in 1969 when Brinco, out of desperation, signed the deal with Hydro Quebec that sunk the province financially. We now have a Premier who is desperate to industrialize the province, but is stuck without a major backer/customer. The thought actually scares me, but recent media reports seem to imply a flirtateous eye is winking at Hydro Quebec. Surely, and I haven't heard the ice forming below, it would be a cold day in hell before we would do that to the province again.

If we hope to get financing from the international community, or at home in Canada for that matter, the financial fundamentals of the province must be sound. Sound means reducing debt, rationalizing spending, a Newfoundland-first procurement policy, but just as importantly increasing revenues. Not by way of taxing whats left of the economy to death, but recapturing what is otherwise bleeding away to push up Quebec's economy. This isn't being anti-Canadian. This is becoming masters in our own house. Not as separatists or radicals, but in self-defence of the Newfoundland way of life.

Simply put, we need to take back the Upper Churchill - period. Without it we won't get a cent. If we are to be a Hydro Power in the international sense, then we need to utilize what we have. Hydro Quebec, by whatever means, must be convinced to rip up the Power Contract and renegotiate the power of the Upper Churchill. No other province, and I've lived in alot of them, would tolerate the raping that Newfoundland is recieving at the hands of Hydro Quebec. Nor should they. Even Alberta unilaterally changed its oil royalty program with the big boys, although I believe they have been convinced to change that policy. There is, however, a big difference between Hydro Quebec and say Esso. The bottom line is that if Newfoundland must throw the switch on the Upper Churchill, and deny Hydro Quebec any power from that point, then so be it. To carry on with the Power Contract of 1969 is economic suicide for Newfoundland, without question, the results of which will be seen when Newfoundland tries to raise the money to develop the Lower Churchill. All that evil needs to grow is for good men/women to turn a blind eye.

1 comment:

  1. The preamble of that agreement is exactly the opposite of what happened. The increase in the retail price of electricity wasn't factored in enough. Great information.


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