08/17/2011 05:10 EDT | Updated 10/17/2011 05:12 EDT

Muskrat Falls Hydroelectric Project To Get Loan Guarantee From Federal Government


ST. JOHN'S, N.L. - A news report says the federal government will announce details this week of a loan guarantee for the proposed $6.2-billion Muskrat Falls hydroelectric project in Labrador.

NTV News cited sources it didn't identify who say a memorandum of understanding on the financial package will likely be announced Friday in St. John's.

A spokesman for the Prime Minister's Office said he can't confirm the report, but added that Stephen Harper's election promise to provide a loan guarantee or equivalent financial support for the project stands.

The promise has raised the ire of the Quebec government, which says any federal support would amount to an unfair subsidy and encroaches upon provincial jurisdiction.

Last year, the governments of Newfoundland and Nova Scotia made a joint request to Ottawa for a $375-million loan guarantee to help build a subsea power cable that would transmit energy from the project between the two provinces.

Under the conditions of a term sheet announced last year to develop the project, Nalcor Energy, Newfoundland and Labrador's Crown energy company, would spend $2.9 billion to build a power generating facility at Muskrat Falls capable of producing 824 megawatts of electricity.

A transmission link from Labrador to Newfoundland would cost $2.1 billion, $600 million of which would be provided by Emera (TSX:EMA), Nova Scotia's private utility. That link would span 1,100 kilometres, including a 30-km subsea connection across the Strait of Bell Isle.

A 180-km subsea link between Cape Ray, N.L., to Lingan, N.S., would cost $1.2 billion, all funded by Emera.