Inflation exposed the Upper Churchill contract as a “sell-out”. With Newfoundland’s unemployment rate exceeding 20% in the late 1960s, the Smallwood government chose jobs rather than risk Quebec Hydro walking away from the massive project. They made not a single demand — not even a royalty from the grant of water rights.
That is one aspect of a history of resource giveaways. I will note one more — in case you think Hydro Quebec wants to be your friend.
BRINCO was the developer of the Upper Churchill. Hydro Quebec’s strategic and persistent delays in signing a power purchase agreement (PPA) with the company — during which time it spent millions in pre-construction costs — had it facing bankruptcy. The company behaved unwisely, to be sure. They listened to Hydro Quebec’s good-faith claims and ran out of cash.
With Hydro Quebec holding a gun to its head, an additional 25-year extended contract was wrung out of BRINCO at an even lower price than it had negotiated for the first 40 years. Even ancient Rome experienced inflation. But any reflection of such an economic norm was suppressed in the feeding frenzy visited upon a far too trusting business partner.