CTVNEWS

Lower Churchill loan guarantee request raises concern

The Canadian Press Published Tuesday, March 1, 2011 11:09AM EST

Newfoundland and Labrador Premier Danny Williams (left) signs the agreement to develop the Lower Churchill hydroelectric project in Labrador with help from Nova Scotia as Nova Scotia Premier Darrell Dexter, while Newfoundland and Labrador Natural Resources Minister Kathy Dunderdale look on at a news conference in St. John's, Thursday, Nov.18, 2010. (Rhonda Hayward / THE CANADIAN PRESS)

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HALIFAX - Members of a Senate committee expressed some reservations yesterday about requests from Nova Scotia and Newfoundland and Labrador for a federal loan guarantee on the Lower Churchill hydroelectric project.

At a Senate energy committee hearing in Halifax, Conservative Richard Neufeld of British Columbia said it would be great if all provinces could have their loans for electricity generation underwritten by Ottawa.

But he says that also adds to the federal debt and asked why Nova Scotia doesn't underwrite the $6.2-billion project itself.

Premier Darrell Dexter said the borrowing rate for Ottawa is much lower than it would be for Nova Scotia.

The president of Nova Scotia Power told the committee that his company doesn't stand to benefit commercially from a loan guarantee.

Rob Bennett said the company's customers would ultimately see lower rates through a loan guarantee because it would reduce borrowing costs on financing for the project.