N.L. Hydro claims victory in Muskrat Falls arbitration dispute with Astaldi

·4 min read
This photo of the Muskrat Falls power generating project was taken in May 2019, seven months after principal contractor Astaldi Canada was evicted from the site. Astaldi was hired in 2013 to build the intake and powerhouse, transition dam and spillway at Muskrat Falls. (Nalcor Energy - image credit)
This photo of the Muskrat Falls power generating project was taken in May 2019, seven months after principal contractor Astaldi Canada was evicted from the site. Astaldi was hired in 2013 to build the intake and powerhouse, transition dam and spillway at Muskrat Falls. (Nalcor Energy - image credit)

Newfoundland and Labrador Hydro has issued a brief statement in which it largely claims victory in its long-running arbitration dispute with Muskrat Falls contractor Astaldi Canada. But big questions remain unanswered.

After repeated requests for information by CBC News, the public utility company confirmed Friday that it has received notice of final award from the arbitration panel and that it is "pleased with the tribunal's decision."

According to N.L. Hydro, the arbitrators ruled that the decision by one of its subsidiaries — Muskrat Falls Corporation —in late 2018 to oust Astaldi from the troubled hydroelectric project in Labrador was done properly.

The panel also "rejected the majority of Astaldi's claims," said the N.L. Hydro statement.

The statement says the utility is still assessing the decision and will release more information in the future, which means a wide range of questions remain unanswered:

  • Was N.L. Hydro ordered to pay any money to Astaldi Canada?

  • What became of the performance security of roughly $180 million that was seized from Astaldi when it was evicted from the project? Was some or all of it returned to Astaldi?

  • How much did arbitration cost? Did the panel order one side to pay the costs of the other?

  • What were the consequences of removing Astaldi from the project, and hiring a replacement contractor, both in terms of schedule and cost?

In response to these questions, CBC News received the following statement from Hydro:

"The settlement document remains confidential in accordance with the parameters of the arbitration process. We will be able to share more detail and accommodate an interview once we make our way through the decision."

Astaldi 'would like to correct the record'

Astaldi Canada declined an interview request, but the company's St. John's-based lawyer, Paul Burgess, released a statement.

"Our client is bound by the confidentiality provisions of the arbitration process and any comment would be inappropriate. As much as Astaldi Canada Inc. would like to correct the record, any comment by them would be inappropriate," Burgess wrote.

Submitted by Nalcor Energy
Submitted by Nalcor Energy

The decision to terminate Astaldi came as the controversial project was teetering on the verge of collapse, and ignited a series of complex claims and counterclaims, with employees, suppliers and contractors owed millions in wages and payments.

The provincial government acted quickly after Astaldi's termination to ensure hundreds of displaced employees were paid for outstanding hours of work.

A source with knowledge of the matter said contractors and suppliers who were owed money following Astaldi's termination have either been paid or are in the process of being paid.

A contract gone bad

Astaldi Canada, a subsidiary of a major Italian construction company, was awarded a $1.1-billion contract in late 2013 to build the intake and powerhouse, transition dam and spillway at Muskrat Falls.

But the contract was beset with delays, highly publicized technical setbacks — including a specialized construction dome that failed miserably — and major cost overruns.

Muskrat Falls Corporation eventually made extra payments to Astaldi in excess of $700 million.

But with Astaldi Canada and its parent company facing serious financial troubles, and with workers and suppliers and sub-contractors complaining they were not getting paid, Astaldi was booted from the site in October 2018. A month later, Astaldi terminated all its employees without cause.

Another company, Newfoundland-based Pennecon Limited, was hired to finish the job.

Astaldi launched a private commercial arbitration process for wrongful termination against Nalcor Energy and the Muskrat Falls Corporation, originally claiming $500 million in damages, according to documents reviewed by CBC News. However, other documents have pegged the claim at $200 million.

A year ago, the provincial government announced that Nalcor Energy was being disbanded, and its operations moved under N.L. Hydro.

Meanwhile, the Astaldi arbitration was considered one of the outstanding risks to the project, and any large settlement was not factored into the current final forecast cost of $13.1 billion.

"We do not anticipate this having a substantial impact on the overall final project budget," a Hydro spokesperson wrote.

The arbitration decision is just the latest chapter in a troubled saga for Muskrat Falls, which was designated a misguided project following a lengthy and complex public inquiry.

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