TheIndependent.ca has obtained access to what we have been informed is a preliminary draft of the loan guarantee between the provincial and federal governments for development of the Lower Churchill. Although Stephen Harper committed to it in the recent election, it was not in the federal budget since he said the conditions were still being worked out. We now have a glimpse at some of those conditions.
TheIndependent.ca takes no responsibility for the accuracy (or lack thereof) of this leaked document. But we felt we should share it with our readership.
Loan Guarantee Document
Government of Canada
DRAFT – FOR CABINET REVIEW
1) The federal government will act as guarantor for financial arrangements entered into by the Government of Newfoundland and Labrador for the purpose of proceeding with the Lower Churchill development.
2) The federal government will also provide a $500 million loan to the provincial government to assist with initial infrastructure development. Interest will be charged on the loan at a rate of 18 per cent. The federal government will retain the right to adjust the interest rate retroactively for a period of five years after the loan is paid off, in order to compensate for unforeseen revenue generated by the project.
3) In order to ensure adequate oversight and shared accountability, the Canada-Newfoundland Offshore Petroleum Board will be restructured to consist of 10 seats, five of which will be appointed by the Government of Newfoundland and Labrador. The remainder will be appointed by the Government of Quebec. The Board will be chaired by a representative of Newfoundland and Labrador except on those occasions when the Prime Minister of Canada may choose to exercise his honourary chairmanship.
4) In the event of a tie vote, the Board will defer to the decision of the honourary chairman, whose vote shall count as two votes, or in fact as many votes as is necessary to break a tie (or near-tie). If the honourary chairman is not available, the Board will defer to the decision of the Government of Quebec.
5) In the spirit of cooperation and in an effort to construct a more positive relationship between the provinces of Quebec and Newfoundland and Labrador, the official language at all Churchill Falls production facilities will be French. As a sign of the federal government’s commitment to European free trade negotiations, workers at the facility will be required to learn Dutch as well.
6) In acknowledgement of the considerable financial risk being undertaken by the Government of Canada in guaranteeing the Lower Churchill loan, the head of Stephen Harper will henceforth appear on the official coat of arms of Newfoundland and Labrador. It will replace the head of the caribou.
7) In the event that Newfoundland and Labrador fails to elect a minimum of three Conservative MPs in the next election (or 15 Conservative MPs in the next three elections; whichever is greater), an additional non-compliance tax will be added to the compound interest rate.
8 ) Uniforms for pages in the Newfoundland and Labrador House of Assembly will henceforth feature a licensed portrait of Stephen Harper on the front. On ceremonial occasions this will be replaced by an emblazoned green traffic light featuring the text “GO Harper!”
9) In view of the project potential to generate revenue and strengthen Newfoundland and Labrador’s fiscal performance, the loan guarantee will be incumbent on a 25 per cent reduction in Canada Health Transfer payments from the federal government. If the project actually does prove to generate revenue, the reduction in CHT payments will be raised to 50 per cent. If the project does not generate revenue or turns out to be an abject failure, the CHT reduction will be reduced to 15 per cent.
10) The guarantee will include a “sunny day clause” to allow Newfoundland and Labrador an interest-free period between the commencement of the loan and the completion of the Lower Churchill production facilities. The interest-free period will correspond to the number of sunny days Newfoundland and Labrador experiences during this period.