Canada to back loans for Labrador hydro project

Fri Aug 19, 2011 1:00pm EDT
 
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TORONTO (Reuters) - Canada will guarantee loans to support a C$6.2 billion ($6.3 billion) hydroelectric project in remote Labrador that will supply power to New England as well as other Canadian provinces, the government said on Friday.

Emera Inc, an energy service provider, and SNC-Lavalin Group Inc, an engineering company, will participate in the project, located at Lower Churchill Falls near Labrador's border with Quebec.

The federal government earlier had promised to back the project despite objections by Quebec's provincial government. The French-speaking province has a stranglehold on power transmission from the region to the lucrative U.S. market.

Federal ministers on Friday signed a preliminary agreement on the loan guarantee with the province of Newfoundland and Labrador and neighboring Nova Scotia, through which transmission lines will travel.

Emera will invest C$1.8 billion in the project, teaming up with Nalcor Energy, a holding company for Newfoundland's energy investments. SNC-Lavalin will lead engineering, procurement and construction management for one phase of the project.

Shares of Emera were down 0.4 percent to C$29.98, and SNC-Lavalin was down 0.2 percent to C$49.31 midday on the Toronto Stock Exchange.

(Reporting by Allison Martell; Editing by Frank McGurty)