WHY MUSKRAT “OVERSIGHT” COMMITTEE IS A FARCE

When Premier
Tom Marshall announced his Administration’s intention to establish an “Oversight”
Committee for the Muskrat Falls construction project 
skepticism abounded. 

Afterall, the
Premier eschewed demands for project reviews when he was both Minister of
Finance and Natural Resources. He supported Premier Dunderdale’s position on
‘oversight’ even as he watched his colleague, Jerome Kennedy, bolt the Cabinet
over the issue.

With
Dunderdale gone, it was natural to wonder whether it was really possible that Premier
Marshall, now possessed of the power to arbitrarily cause a reversal of policy,
might actually do so.

It was left
to the Natural Resources Minister Derrick Dally to announce the details of
Government’s plan.  He confirmed was most
suspected.  

The Oversight Committee will
be completely internal to the Government and consist of the Deputy Ministers of
Finance, Natural Resources and Justice and Chaired by the Clerk of the
Executive Council. The Minister says the Committee will focus on project costs,
scheduling and overall performance.

The Minister
failed to comment on the independence the Committee might exert.
  The subject is moot, anyway, given the
Government’s failure to get serious about the issue of oversight and a determination
to provide for an informed and professional analysis of Nalcor’s management
capability.

With all due
respect to the noted senior public servants, they do not possess the skills to assess
all the issues essential to providing credible oversight of a multi-billion
dollar construction Project.

Undoubtedly,
as senior officials, they have a role to play; chiefly, it is one that entails
co-ordination of the Oversight Committee and communicating the analysis of a
properly constituted expert group to the Premier and Cabinet. 

In the
absence of significant technical expertise, especially in the engineering,
project management and financial fields, this Committee is incapable of giving
Government either independent thought or serious review.

There is no
nice way to say this: the Premier is being dishonest.  He is attempting to mislead an uninformed
public once again.

No one,
including this Blogger, expected the oversight committee to be possessed with
the authority to re-consider the assumptions on which Muskrat is based, however
unsound. Equally, however, no one would have thought a chastened Government
capable of reducing ‘oversight’ to a three martini lunch with Nalcor CEO Ed
Martin on a Friday afternoon.  That is
what the Premier has essentially done.

What might real
oversight actually look like?

First, it
will conduct review of Nalcor’s Muskrat Falls engineering and financial models
and the assumptions on which they are based; an information base, updated
constantly, would be analyzed until project completion. 

It will
demand an analysis to determine whether construction progress, to date, mirrors
Nalcor’s engineering and design criteria, accounts for forecast technical
issues and reflects forecast targets in tendering prices and budgets. 

It will
assess the Project schedule and determine if progress is consistent with
forecasts.
It will
review critical project milestones and assess impediments to their achievement.  For this purpose, it will review what
engineers refer to as the Company’s critical issues log (Risk Log) which describes
possible or anticipated major technical challenges. (One such issue would be the
North Spur’s Quick Clay stability problem and many less tricky and costly issues
that emerged during the design process.)  

An Oversight
Committee would conduct an assessment of the current management expertise to
determine if some of Nalcor’s cable and oil management guys should be switched
out with real hydro dam construction expertise especially considering that
Muskrat is actually a damn project with management issues peculiar to that construction.  

The
Committee would review legal issues that have arisen with contractors regarding
legal drafting and interpretation of tenders. It would review legal agreements
entered into with various parties including the Native Peoples. 

It would determine
whether the Government’s legal commitments are whole, obviating the possibly of
lawsuits and more costs later.

It will note
the construction change orders that have already been issued and why they
needed to occur. 

Then there
would be sub-sets of these issues; all focussed on getting a complex project
executed on time and on budget.

No one
should be left with the impression that four career senior public servants,
each heading major departments of Government, none knowing much, if anything, about
a mega construction project or possessing engineering expertise, can undertake
the role of oversight of Muskrat Falls.  

Who would
even think that four people, working part-time, could perform that which only a
dedicated expert team, intelligently assembled, could possibly undertake? 

Oversight
needs a mandate supported by an honest Government preoccupied with the enormous
challenges of Muskrat Falls and the serious threat of overruns from poor
project conception, management and political influence.  It needs a budget and a team of experienced
professionals, at least some of them with international expertise on several
hydro projects.  It needs independence.

The Premier
has offered nothing of the kind. 

That such a
Committee should be inscribed with the title “oversight” is inherently dishonest
and unbecoming of a Premier but perhaps not this Premier.

He has proven again why he should not be trusted.

Nalcor is solely
in charge.  There is no oversight of
Muskrat Falls.
Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.

NALCOR (Masquerading as ‘Hydro’)LIVES IN AN UPSIDE DOWN WORLD

If a Big Mac costs McDonalds $10 to produce and it is sold for $1.50, McDonalds will go out of business. They would not declare a profit!

REMEMBERING BILL MARSHALL

Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.

6 COMMENTS

  1. The issue of oversight on Muskrat Falls is blown out of porportion. It is too late. There is no backing out on this decision. The dam will be built.

    What it is not too late for is judgement on the decisions made by Nalcor and this government.

    To help the population reach a evidence based decision we need to understand what will this project cost. Release the schedule performance. Release the updated cost estimes. Released the earned value calculations. Give the public the information to the public, and let those who are paying for this project decided if it was worthwhile.

    Despite Ed Martin telling the people of the province that updated cost estimates would be provided Q1/Q2 of 2014, they now will not be released until July at the earliest. After the PC leadership convention.

    Which is unfortunate. The wake of Muskrat Falls will be the biggest politicial issue for the new premier. I for one would like the PC leaders to debate the project, with all the facts in the public domain.

    These delays are unacceptable, and purely political. It is Bull Shit, and there should be riots in the streets.

  2. This oversight committee is but one more flagrant attempt by a secretive and dishonest government to make themselves smell a little better. They are only fooling themselves while continuing to try to fool the people of NL. It is a shameful and power-drunk decision by a government that is devoid of basic principles of good governance. They are not worthy of any support in 2015….. given their outright incompetence in managing the oil revenues collected since 2005….. and their deceitful efforts to obscure the real reasons for this monstrous financial debacle called Muskrat Falls.

    Everything they do from here on in will only drive the financial nail deeper into the mountain of debt now gathering and one that will become an even more insurmountable financial mountain of debt. It will grow each year as they throw away the province's revenues on a tiny dam with a colossal debt.

    It is even more disheartening to see every politician in the province capitulating to the insidious idea that it cannot be stopped. Yes….it can be stopped even now….but will go ahead because the Opposition have given up the fight…and so have many of the people of the province. Stopping it would cost billions but forging ahead will cost untold billions. History will judge us and them for the complacency we have shown.

  3. The great and shameful irony in Muskrat Falls is that it is being advanced by a Tory government that, despite a glorious opportunity to advance transparency and integrity in review, is acting more clandestinely Smallwoodian than Smallwood himself.

    If democracy has one great fault, it is that individuals are elected and appointed to positions of significant power and are granted the legal capacity to develop and implement policies for which they have little or no expertise. Some elected officials recognize their limitations and seek out expertise, while others–convinced and driven by their own hubris–forge ahead alone. The result is disasters that financially leverage countless generations. Sadly, without appropriate oversight, Muskrat Falls appears destined to financially hobble the province once again and this troubles me greatly.

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