tag:blogger.com,1999:blog-5235138415013046381.post7165637776243116901..comments2023-10-25T07:29:40.789-02:30Comments on UNCLE GNARLEY: WHY WE SHOULD DISMANTLE NALCOR (PART I)Des Sullivanhttp://www.blogger.com/profile/02566013585647491614noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5235138415013046381.post-48309332630781195552015-01-29T22:25:58.969-03:302015-01-29T22:25:58.969-03:30State Owned Enterprises (SOEs) are a problem but m...State Owned Enterprises (SOEs) are a problem but mostly when the old Soviet system of 100% ownership is used. <br /><br />State owned utilities can work if they stick to their core mandate and do Request for Proposals for incremental power so there is an element of competition and sometimes innovation in supply. Nalcor did a good job at this in securing a good price for the 55 MW of wind. There is no evidence that NL Hydro has been a good steward of the affairs for the past half century given that we have about the fourth highest cost electricity in Canada even though about 75% of the energy originates from water projects that should have been paid down by now. In other words, the holy grail or where we want to be in 55 years with Muskrat Falls.<br /><br />Privately owned monopoly utilities are even worse than state owned ones (e.g. Emera with highest power rates in country) because there is little incentive for a push. Nobody is beating at their heels and all they have to do is a bunch of studies to convince the Public Utility Board and they are away with a higher than market return on investment. The one saving grace is the Public is protected from the large Muskrat deals because they must produce at the rates projected. If there is a large overrun on cost then the equity holders take the hit and their capital structure cannot be as highly debt loaded as government backed one can.<br /><br />Statoil, the Norwegian SOE is 40% privately owned and is privately operated. The Norwegian Government ownership is no different than the Ontario Teacher’s Fund large block of ownership in the stock market. The Fund Managers get a seat on the Board except that perhaps they direct that investment goes first into Norway but otherwise it is hands off. It is my understanding that Williams/Dunderdale wanted to establish a large player like Statoil. Unfortunately, that is not what we have in Nalcor.<br /><br />If Nalcor was set-up like Statoil, no private investment group would make an investment such as Muskrat when the numbers were so marginal. They may go along the Hebron investment which may not give the anticipated rich return but I think that project will still produce well over a billion barrels of oil and generate at least between $75 and $100 Billion in revenue over the next 30 years based on a $14 Billion investment. At current market exchange rates all it needs is an average world price of $69 US to hit that mark. Hebron is not the problem. <br /><br />The junior exploration work on the West Coast could have been done for a fraction of the cost (approximately one fifth of the cost) in partnership with an operating junior company as long as the junior was the operator and Nalcor was only the investor. As an example a junior would never build a $5 M road to nowhere. They would have figured out a much more economical way to get the equipment on site.<br /><br />There may be a case for the Nalcor seismic investment whereby it is meant as a form of public pre-investment infrastructure which is perhaps more effective than some of the government line Department’s work in the area of attracting investment.<br /><br />In summary, when you look for options to suggest for the wind down Nalcor, consider the Statoil model.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5235138415013046381.post-78383411180013141942015-01-29T09:55:16.455-03:302015-01-29T09:55:16.455-03:30"...blinded by petty, narrow-minded, and self..."...blinded by petty, narrow-minded, and self interested political goals".<br /><br />That's a perfect summation of the rationale behind the Muskrat Falls project.<br /><br />Absolutely perfect.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5235138415013046381.post-13088594403741508302015-01-26T11:04:51.029-03:302015-01-26T11:04:51.029-03:30suuuuuuure, not like the PC's did any of that....suuuuuuure, not like the PC's did any of that. (Danny Billion$). I fully support this page...at least he tells it as it is. Not smoke and mirrors as the current administration is used too. Drink the kool aid much buddy?! or should I call you steve? Paul? or better yet Manning?<br /><br />Laughable this province has become. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5235138415013046381.post-41595171992680982192015-01-26T10:34:36.681-03:302015-01-26T10:34:36.681-03:30You are blinded by petty, narrow-minded, and self-...You are blinded by petty, narrow-minded, and self-interested political goals. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5235138415013046381.post-4319122180756342462015-01-26T09:43:10.566-03:302015-01-26T09:43:10.566-03:30There is no justification for completing Muskrat. ...There is no justification for completing Muskrat. There is very limited power available and no need here, or in Labrador or for "export" markets, at a sales price that will cover this cost. All in, this project is trending toward 12-14 billion. Astonishing. Simply astonishing. Anonymousnoreply@blogger.com