Canada has offered a temporary waiver on debt payment of about $644 million for developing Newfoundland and Labrador’s Muskrat Falls hydroelectric power plant. The waiver is expected to provide some relief to a province which is already in debt.
The project has faced significant cost overruns. The Canadian government has provided a large amount of 7.9 billion Canadian dollars since the project was announced in 2010. The final restructuring agreement may include federal participation in the capital structure, equity and debt profile of the project.
According to BMO Capital Markets, Newfoundland’s net debt is the highest among the ten provinces. As a share of gross domestic product, the debt is projected to rise to 55.6 per cent in 2020-21 from 42.1 per cent in 2019-20. Canada’s federal as well as provincial debt loads have increased notably during the Covid-19 pandemic.
Renewable energy accounts for two-thirds of Canada’s power generation largely due to its significant hydropower resources. According to the government, six out of every 10 Canadian homes and businesses are powered by hydropower. Major hydropower projects under construction in recent years include: the 1,100 MW Site C project in British Columbia; the 824 MW Muskrat Falls project in Labrador; the 695 MW Keeyask project in Manitoba; and the 245 MW La Romaine 4 project in Québec.