The Canadian government is delaying debt and financing payments and moving forward on a process for a renewed financial structure to help make the Lower Churchill projects more financially stable.

Prime Minister Justin Trudeau and  Newfoundland and Labrador Premier Andrew Furey said in a statement the Lower Churchill projects are an important part of Atlantic Canada’s clean-energy future and will provide a reliable and long-term source of clean power in the Atlantic region. However, multiple delays, including recent ones due to COVID-19 and soaring costs have inflated the price tag to $12.7 billion – double the original estimate.

Debt and financing payments owed by Nalcor, which operates the Lower Churchill project in Labrador, will be delayed. Since the project isn’t yet regularly producing power, Ottawa has temporarily waived the payment obligations to “help reduce immediate financial pressures on Newfoundland and Labrador,” according to a news release.

The province would have been obliged to pay $844 million, of which $780 million would have been due by the end of December 2020, adding to the Newfoundland and Labrador debt. Deferral of those payments relieves the “immediate fiscal pressures” the province was facing, the statement says.

Additionally, the two governments will continue to work together on options to ensure a financially sustainable long-term solution for the Lower Churchill Projects, and identify opportunities to support electrification efforts in Newfoundland and Labrador.

As well, a senior executive adviser on the Lower Churchill Projects has been appointed. The statement says Serge Dupont will help support, and develop recommendations on, the financial restructuring of the Lower Churchill Projects and make progress on major electrification priorities to advance the Atlantic Loop.

The Lower Churchill Projects are a set of hydroelectric generation and transmission projects that includes the Muskrat Falls Generating Station on the Churchill River in Labrador, the Labrador Transmission Assets, the Labrador–Island Link that connects to the island of Newfoundland, and the Maritime Link that connects to Nova Scotia.

Since the announcement of the Lower Churchill Projects in 2010, the Government of Canada has guaranteed a total of $7.9 billion in debt related to the projects for the benefit of Newfoundland and Labrador.