A re-elected Conservative government would provide a loan guarantee for Newfoundland and Labrador's controversial Lower Churchill River hydroelectric project, Stephen Harper announced Thursday.
The Conservative election gift was unveiled at a St. John's rally for Mr. Harper, his first stop in Newfoundland and Labrador this election campaign. When completed, the development would provide clean power to Newfoundland and Labrador, with spare wattage left over to sell into the New England market.
Anxious to show that Newfoundland is not being singled out for special treatment, Mr. Harper also announced a future Tory government would consider financially supporting other major clean-energy projects across Canada.
"We will consider financial support to projects that are of national or regional importance, have economic or financial merit and significantly reduce greenhouse gas emissions," he said.
"We will do this in a way that is equitable across every region of Canada."
The Tories also released a statement saying a future Harper government would "provide a loan guarantee or other financial support for the Lower Churchill hydro-electric project."
Officials were vague on what "other financial support might include," saying the commitment was really only for a loan guarantee.
The Tories hope to pick up at least three - if not more - of Newfoundland and Labrador's seven seats after coming up empty in 2008 after then-premier Danny Williams ran an "anybody but Conservative" campaign in that race.
Tory officials, speaking on background, said a Conservative government would guarantee a loan for $4.2-billion of the $6.2-billion price tag for the Lower Churchill project. This means Ottawa would be co-signing a $4.2-billion loan along with the provinces of Nova Scotia and Newfoundland and Labrador.
The officials said Ottawa's participation is useful because the federal government has a far better credit rating than the provinces and its co-signing would significantly reduce the cost of borrowing the money for the project.
The assistance would be extended through either of two federal agencies: the Export Development Corporation or the Business Development Corporation.
The loan guarantee could end up affecting Ottawa's books. The federal government might be compelled to take a provision against possible default on the loan, which would register as a charge on Ottawa's balance sheet.
Conservative officials waved off the notion this would be a case of Ottawa unfairly subsidizing a competitor of Hydro-Québec, saying all provinces would be selling energy into the power-hungry U.S. market.
They pointed to other examples of how Ottawa has backed clean energy including federal support for a carbon capture and storage project in Weyburn, Sask., and a natural-gas pipeline in Thetford Mines, Que.
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 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.