Muskrat Falls re­port ‘re­as­sur­ing’: Coady

The Labradorian - - NEWS - BY ASH­LEY FITZ­PATRICK

EY states the Lib­eral gov­ern­ment has im­proved over­sight and re­port­ing on the Muskrat Falls project since April 2016, while rec­om­mend­ing some fur­ther im­prove­ments.

“The project, Nal­cor and the provincial gov­ern­ment will need to main­tain a re­lent­less fo­cus on risk man­age­ment given the project’s high level of in­her­ent risk,” reads the con­sul­tant’s lat­est re­port, re­leased last Thurs­day.

Nat­u­ral Re­sources Min­is­ter Siob­han Coady took ques­tions as the re­port was is­sued, em­pha­siz­ing the re­peated ref­er­ences to “sub­stan­tial progress” by the gov­ern­ment on project over­sight and re­port­ing since the point where the project’s early cost es­ti­mates were of­fi­cially de­clared blown.

“That’s im­por­tant. As we move for­ward, that’s very im­por­tant. We want to make sure that we’re go­ing in the right di­rec­tion, be­cause we cer­tainly could be go­ing in the wrong one,” she said.

Coady said the re­port pro­vides re­as­sur­ance to the gov­ern­ment.

“It was good to hear from an in­de­pen­dent source that things are pro­gress­ing and there has been sub­stan­tive progress,” she said.

The doc­u­ment notes changes since the Lib­er­als have taken power, in­clud­ing: new project over­sight com­mit­tee ap­point­ments, a new Nal­cor En­ergy board of directors, a new pres­i­dent and CEO at Nal­cor En­ergy (Stan Mar­shall), progress with set­tling com­mer­cial dis­putes and new fore­casts on cost and time­line be­ing put through an up­dated risk-as­sess­ment process.

The June es­ti­mate of a $12.7-bil­lion project cost and the time­line to full power pro­duc­tion were not re­viewed by EY. The EY work also did not in­volve an engi­neer­ing re­view or any val­i­da­tion of the con­struc­tion process.

In terms of re­port­ing and over­sight, EY did con­sider and rec­om­mend stan­dard­iz­ing the re­port­ing to the Nal­cor En­ergy board of directors and the in­de­pen­dent over­sight com­mit­tee, doc­u­ment­ing the in­ter­nal risk mod­el­ling work by the project team com­pleted each month and adding more fre­quent as­sess­ments of the project time­line.

The con­sul­tant also sug­gested hav­ing a process to re­tire, strike from the bud­get, un­tapped con­tin­gency as work is com­pleted.

In late 2015, the new Lib­eral gov­ern­ment orig­i­nally tasked EY to de­ter­mine if the Muskrat Falls project’s cost and time­line fore­casts were rea­son­able. In what is now called the EY in­terim re­port, is­sued in April 2016, the con­sul­tant stated they weren’t rea­son­able and is­sued a se­ries of rec­om­men­da­tions for im­prov­ing project over­sight.

This final re­port is fo­cused on the re­sponse to the rec­om­men­da­tions at that time and is es­ti­mated to have cost at least $258,000 (the price stated is sug­gested by in­voices to date, but a final to­tal has yet to be con­firmed). It brings the to­tal cost for EY’S work on re­view­ing Muskrat Falls over­sight to roughly $2.2 mil­lion.

NDP Leader Earle Mccurdy said some of the big ques­tions out­stand­ing for the public now — re­lat­ing to the North Spur and any risk of dam fail­ure, and to the planned ap­proach to methylmer­cury mit­i­ga­tion — re­main unan­swered.

“When they say that they’re more con­fi­dent in the es­ti­mates, well, 78 per cent of the work is done,” Mccurdy said. “It’s nor­mal that as you get to the end of any project, you’re build­ing a house or some­thing, you have a lot more con­fi­dence in the costs when it’s prac­ti­cally done than you do at the be­gin­ning with all the un­cer­tain­ties.”

Mccurdy added he was dis­ap­pointed there was no pro­vi­sion of the EY re­port to the NDP and Pro­gres­sive Con­ser­va­tives prior to the af­ter­noon me­dia event, which was held at the Nat­u­ral Re­sources build­ing on El­iz­a­beth Av­enue in St. John’s.

FILE PHOTO

The Muskrat Falls Hy­dro­elec­tric site.

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