Premier Williams announces Expressions of Interest process and outlines province�s strategy for development of Lower Churchill

Parties interested in partnering with the Government of Newfoundland and Labrador in developing the Lower Churchill will be required to respond to a Call for Expressions of Interest (EOI) which will soon be issued by the province. Premier Danny Williams today announced that the EOI process will be directed at companies, consortia or other parties with the technical and financial capacity to enter into negotiations with the Government of Newfoundland and Labrador on the development of the Lower Churchill. He also released details of a recent agreement with Sino Energy consortium and made public the proposed Newfoundland and Labrador-Quebec deal of the fall of 2002.

Expressions of Interest
"Through the Expressions of Interest process, we hope to attract a wide variety of interested parties and options for developing the Lower Churchill," said Premier Williams. "I have always said that we will look at any and all proposals with a view to finding the best option for moving forward with negotiations with interested parties. This process will enable us to find a potential agreement that optimizes benefits for Newfoundlanders and Labradorians. We will advertise this call for Expressions of Interest in areas which will attract the attention of the most capable organizations in the world."

Premier Williams said there are many options which have yet to be fully explored including selling power to Ontario, facilitating the sale of power through an Atlantic Canada route via an underwater cable, and evaluating how the province�s untapped hydroelectric potential could fit into a National Energy grid. Serious consideration must also be given to exploring all options for using Lower Churchill power to generate economic development within the province of Newfoundland and Labrador.

The EOI process will be the starting point for all potential proponents interested in participating in the development of the Lower Churchill resource. The process will be open to all interested parties, including crown entities and private and/or public corporations. The Call for Expressions of Interest will be invited in October. The deadline for submissions will be outlined in the invitations.

Sino Energy Consortium
Premier Williams today also released copies of a Memorandum of Understanding (MOU) and a Cooperation Agreement between the Government of Newfoundland and Labrador, Newfoundland and Labrador Hydro and a consortium of interests who expressed a desire in the winter of 2004 to examine a development option for the Lower Churchill River.

The consortium, known as the Sino Energy Consortium, includes: Procon Mining and Tunnelling Ltd., a multi-faceted business with extensive experience with hard-rock mine development; PCL Construction Group Inc., the largest general contracting organization in Canada; and China National Machinery and Equipment Import and Export Corporation, a company which deals mainly with the contracting of international engineering projects and the import and export of machinery and electrical products, as well as foreign economic and technical cooperation.

The group is examining an "Atlantic" route for transporting energy from the Lower Churchill to Northeastern North America by way of submarine cables from the coast of Labrador directly to the United States. The concept could also include a supply of energy to Newfoundland and Labrador.

"Sino Energy Consortium approached the province earlier this year demonstrating a strong interest in examining the Atlantic route," said Premier Williams. "The partners are very credible players who believe this option is worth studying. This government is open to any option which proves to be feasible and provides long-term maximum benefits to the people of the province. We were, therefore, pleased to enter into discussions with the consortium and to enable them to explore the Atlantic route option with an MOU and cooperation agreement."

Work undertaken by the consortium to study the Atlantic route is being financed by the companies themselves. No public funding has been requested or provided by the provincial government. The MOU allowed the government to engage in non-exclusive discussions regarding a potential business relationship or transaction relating to the Lower Churchill project, and work together with Sino for the possible advancement of the project.

"Sino Energy is still working on its own assessment of the Lower Churchill project, and we are not compelled by any agreement to enter into further negotiations," said the premier. "Any proposal from Sino will be evaluated as a part of the EOI process."

The NL-Quebec Proposal of 2002
Premier Williams also released the Framework Agreement negotiated by the previous government.

"I am releasing this deal today because it sets a benchmark which we must exceed," said the premier. "As well, we have received several media requests for the release of this document, and we have made the decision that it is in the public�s best interest to release it. I stand by my criticism of that deal as Leader of the Opposition at the time. The main concern of our caucus and many others was that Quebec would have had too much control over the whole project. This is something that is clearly unacceptable to my government."

It was possible that Newfoundland and Labrador could have lost ownership or control of the project to Hydro Quebec in the event of cost overruns, overruns which could also have affected the province�s credit rating. "This, among other issues, confirms our view held at the time that this was a bad deal for our province, one which we must improve upon if we are to consider signing such an important agreement in the future," said the premier.

The premier noted that we are in a much stronger position now to negotiate an agreement on the development of the Lower Churchill than at any time in our history. The Lower Churchill is a significant source of renewable, low-cost, clean electricity and the marketplace is ripe for such a development. Government�s commitment is to ensure this resource is developed in a way that brings real and long-term benefits for the people of this province.

"Our overall approach for potential development of the Lower Churchill is strategic, reasoned, multi-faceted and, most importantly, in the very best interest of Newfoundlanders and Labradorians," said the premier. "Give-aways are a thing of the past and real benefits are the foundation of our future. I have said before that, if we cannot get an agreement with maximum benefits for Newfoundlanders and Labradorians, I will allow the water to continue to run for as long as I am privileged to be premier of this province. For far too long, the attitude has been that Newfoundland and Labrador has to go out and beg a partner to develop this. The fact is that the world should be knocking on our door to become our partner in developing this world-class asset. I am here today to tell the world that we are ready to accept your offers and willing to work with those who ensure maximum benefits to the people of this province."

BACKGROUNDER

Invitation for Expressions of Interest in Development of the Lower Churchill Hydroelectric Resource

The Government of Newfoundland and Labrador is preparing to invite written expressions of interest in the development of the Lower Churchill hydroelectric resource. The objective of this public invitation will be to identify and assess all potential development options for this resource. Proposals that meet government�s criteria will be considered for feasibility assessment.

The Lower Churchill has been studied for many years; however, as circumstances and technology change, these changes may present new development opportunities. The Government of Newfoundland and Labrador is committed to developing the Lower Churchill resource under the best possible arrangement for the people of the province. The ideal way to achieve this is to publicly solicit expressions of interest from all interested parties � including crown entities and private and/or public corporations. We will then compare and evaluate all development proposals relative to government�s objectives for the development of the resource.

The Government of Newfoundland and Labrador and Newfoundland and Labrador Hydro (NLH) will jointly invite all interested parties to submit proposals for development of the Lower Churchill hydro resource. This formal process will be the starting point for all potential proponents interested in participating in the development of the Lower Churchill resource, regardless of any previous exploratory discussions to date.

An information package prepared solely for use by prospective proponents will include:

• Background information on the Lower Churchill resource;
• Government�s objectives for development of the resource;
• A technical description of the Gull Island and Muskrat Falls projects;
• Background information on the aboriginal land claim to the development area;
• Proposal requirements and evaluation criteria;
• Legal obligations � such as confidentiality terms, government obligations, proponent obligations, deadlines etc.

Proposal requirements will include:

• Summary of project development concept;
• Statement of proponent�s objectives for investment;
• Summary of provincial benefits;
• Technical description of the project configuration;
• Description of the proposed development concept i.e. type of commercial arrangements with the government and other parties, market strategy and financing plan and principles;
• Statement of proponents� business operations, relevant experience and financial capacity;
• Plan for a feasibility assessment (stage 2);
• Identification of plan to address aboriginal interests;
• Identification of plan to address environmental issues.

We will evaluate proposals relative to established criteria. All proposals will be assessed in an equitable manner. Successful proponents will be invited to execute a memorandum of understanding with the Government of Newfoundland and Labrador and NLH outlining the terms for a feasibility assessment to be undertaken for the selected development proposal(s).

• Expressions of Interest will be invited in October 2004;
• Deadline for submission of proposals will be specified in the invitation;.
• Completion date of the proposal evaluation process will be determined by the number of proposals received.

Background on the Lower Churchill Hydro Resource
The Churchill River in Labrador has long been recognized as a significant, low-cost supply of clean, renewable energy that has yet to be fully developed. The Lower Churchill hydro resource includes two potential sites. Gull Island (2,000 MW) is located 225 kilometres downstream from an existing 5,428 MW generating facility at Churchill Falls. A second smaller potential site is located at Muskrat Falls (824 MW), 60 kilometres further downstream.

Media contact: Elizabeth Matthews, Office of the Premier, (709) 729-3960 or (709) 690-5500

2004 09 20               1:00 p.m.