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An aerial view of Muskrat Falls, on Labrador's Churchill River. (Paul Daly/The Globe and Mail/Paul Daly/The Globe and Mail)
An aerial view of Muskrat Falls, on Labrador's Churchill River. (Paul Daly/The Globe and Mail/Paul Daly/The Globe and Mail)

Harper to back Lower Churchill mega-project in bid for Newfoundland seats Add to ...

Conservative Leader Stephen Harper is due to announce a federal loan guarantee for the $6.4-billion Lower Churchill River power project as part of his campaign to recapture seats in Newfoundland and Labrador, where he was shut out in the last election.

Mr. Harper lands in St. John's on Thursday enjoying a much cozier relationship with Premier Kathy Dunderdale than he experienced with her predecessor, Danny Williams, who ran an "anybody but Conservative" campaign in 2008.

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While in the province, the Conservative Leader plans to announce a federal loan backstop for the massive hydroelectric project, sources said Wednesday.

The Conservatives hope to pick up at least three - if not more - of Newfoundland and Labrador's seven seats after coming up empty in the face of Mr. Williams's angry onslaught two and a half years ago.

And Newfoundlanders are expecting Mr. Harper to arrive in St. John's bearing an election gift - federal assistance for the power mega-project that will deliver clean power to their province as well as Nova Scotia and the New England market.

Newfoundland and Nova Scotia made a joint request for loan guarantees that would reduce financing costs on the project, which includes a dam at Muskrat Falls in Labrador and underwater transmission cables onto the island of Newfoundland and then on to Nova Scotia.

Provincial officials have been meeting with their federal counterparts on details of the package, and sources say the Conservative leader has sent positive signals that a decision would be announced during his campaign stop.

The provinces had originally requested the loan guarantee as well as a direct infrastructure investment of $375-million. But they have focused on the financial backstop in the face of complaints from Quebec that it would be unfair to provide federal subsidies for a project that will compete with Hydro-Québec.

Earlier this month, Ottawa reached an agreement in principle with Labrador Innu on a financial package that would form part of a land-claims settlement - another key step in moving forward with the Lower Churchill River project.

Provincially owned Nalcor Energy has already completed pre-engineering of the site, and announced last week that Montreal-based SNC-Lavalin Group will provide engineering and construction management. The company hopes to begin construction next fall, with the first power delivery in late 2016.

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