Muskrat inquiry will cost province 'hundreds of millions,' says project leader

The Muskrat Falls inquiry will cost Newfoundland and Labrador hundreds of millions of dollars because it's revealing a treasure trove of information to potential claimants, says a senior leader on the project team.

"It's a poker game, and our hand is on the table," Ron Power said bluntly during his second day of testimony at the inquiry Wednesday.

Power's statement was in responseto questions from an inquiry lawyer about a 2018report prepared for Nalcor Energy that identified the inquiry as a risk that could add $135 million in additional costs to the project.

That's because construction of the project is not yet complete, millions of documents are being entered into evidence at the inquiry, and the demands being placed on key project team members who are being asked to provided information and testimony to the inquiry.

Some contractors, including Astaldi Canada,have filed large claims against Nalcor, arguing they are entitled to additional payments, and Power believes their efforts are being aided by the inquiry.

"This inquiry has made available a plethora of information that will result in a lot of claims against this project. This inquiry will cost this province hundreds of millions of dollars.And you can take that one to the bank," he said.

"All our project management team have that opinion. And that's my opinion after 43 years of working on projects."

Some have questioned the timing of the inquiry for those very reasons, including Nalcor CEO Stan Marshall, and Power is one of those who believes it will be a very costly mistake.

As a deputy project director, Power is a senior, long-serving member of the team overseeing construction of Muskrat Falls.

He said the inquiry is a very serious distraction for those trying to finish the project.

"I'm surprised, personally, why a lot of the younger people on the project management team are still working on this project. It's only their commitment to try to finish this thing because of the scrutiny we're under," Power said.

LeBlanc reacts

The comments drew a quick response from inquiry commissioner Justice Richard LeBlanc, who said he doesn't care how Power feels about the inquiry.

"It'sthe government who represents the public who are paying for this project that called this inquiry," he said.

LeBlanc then said the inquiry is being careful not to open up any avenues that could be exploited by potential claimants in their quest to extract more money from Nalcor, with some especially sensitive information being withheld from public release.

"I don't even think, to be quite frank, that this inquiry is going to cost Nalcor Energy $135 million," LeBlanc said.

LeBlanc thenseemed to question the motives of the Muskrat Falls project team.

He said the inquiry may contribute to higher project costs "if money is being spent to somehow influence the inquiry or do some other thing or whatever, but all that really needs to have happen here is I get close co-operation."

When Muskrat Falls was sanctioned in late 2012, then-premier Kathy Dunderale and Ed Martin former Nalcor CEO and the man widely regarded as the project's architect sold it to the public with a $6.2-billion price tag, with first power to be delivered in mid-2017.

But all-in costs for Muskrat have since soared to at least $12.7 billion, and first power is not expected from the generating station in Labrador until late this year.

When challenged by inquiry co-counsel Irene Muzychka about the massive cost and schedule overruns, Power replied,"None of us like it. We're doing our best to execute this project to the best of our abilities."

The exchange was one of many notable moments for Power during hours of questioning at the inquiry.

Another example was Power repeatedly blamingAstaldi for a "significant portion" of the cost overruns, saying the company's poor performance had a cascadingeffect on the project.

Astaldi was awarded a $1-billion contract in late 2013 to construct the power house and other concrete infrastructure, but the contractor struggled badly in the early going, with Power at one point in 2014 describing the situation with Astaldi as "virtually hopeless," and saying the company was "perceived as a joke" by workers at the site.

Nalcor was eventually forced to pay Astaldi hundreds of millions in additional settlements, and eventually evicted the company from the site late last year. Another contractor, Pennecon, has been hired to finish Astaldi's contract, at a cost of $150 million, according to Power.

Muzychka pressed Power on whether he believed the Muskrat management team should accept some of the blame for the problems, asking what factors he saw, as project manager, as the reasons for the overruns.

"Well, I think the estimates were too aggressive, very aggressive, for one," he replied. "Contractor performance."

When asked if things could have been done differently, Power replied,"Yeah, perhaps."

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