Quebec, Newfoundland agree on huge power project

Reuters News Service
Planet Ark
August 2, 2002

HALIFAX — The Canadian provinces of Quebec and Newfoundland said yesterday they had reached an informal agreement on developing a massive hydro-electric project at Gull Island in the remote Labrador region of eastern Canada.

Speaking at the annual premiers conference in Halifax, Quebec Premier Bernard Landry and Newfoundland Premier Roger Grimes told reporters that the deal was a prelude to any formal agreement that may be reached between the two provinces. The estimated cost of the dam and transmission lines in Labrador could reach C$4 billion ($2.5 billion).

A full agreement is expected in the fall, following formal negotiations, they said. Newfoundland had been dealing with aluminum giant Alcoa Inc. over the Gull Island project but a deal fell through a few months ago.

"We don’t anticipate something at this point in time that could completely throw the project off the rails and see it not happen," Grimes told a news conference.

The premiers said that any deal would include the development of a 2,000 megawatt power project, a long-term contract reflecting fair value and sharing of project risks. Provincially owned Hydro-Quebec would finance the construction while Newfoundland would own the production and transmission facilities in Labrador.

"We have a high level of confidence that we’ve talked through those issues for a year now informally, that we’ve thought about them extensively, that we believe they’re do-able," Grimes said.

Gull Island is about 225 km (140 miles) from the massive Churchill Falls hydro-electric development in Newfoundland’s central Labrador region.

All the electricity produced would be sold to Hydro-Quebec with recall rights held by Newfoundland. Both provinces said a deal would involve the Innu aboriginal people who live in the area.

Environmental assessments would also be conducted to gauge the impact of the project, which would see the flooding of about 85 square kilometers (33 square miles) of land.

If a deal is approved this fall, construction could start in three years and be finished in 2012.

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