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PM’s trip to Labrador will finalize Muskrat Falls loan, sources say

Muskrat Falls, on the Churchill River in Labrador.

Paul Daly/The Globe and Mail

Prime Minister Stephen Harper's trip to a military base in Labrador on Friday will finalize a long-awaited federal loan guarantee for the Muskrat Falls hydroelectric project, sources indicate.

The visit appeared to take Premier Kathy Dunderdale by surprise Thursday.

"I haven't spoken to the Prime Minister's Office, no," she told reporters at the legislature. "Our team is in Ottawa negotiating around the loan guarantee, but we're not done yet."

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Ms. Dunderdale said she'd received no courtesy call and had no plans to make the trip to Happy Valley-Goose Bay. She said she only learned of Mr. Harper's visit through media reports.

Mr. Harper promised a federal loan guarantee or financial equivalent that could shave hundreds of millions of dollars off the total cost of a project that's expected to exceed $7.4-billion.

Ms. Dunderdale's Progressive Conservative government has said it was waiting on the federal backing before it officially approves Muskrat Falls. She has said for months that a deal is imminent and has blamed delays on the tedium of translating agreements in principle into legally binding terms.

Late Thursday, Ms. Dunderdale's office and that of Nova Scotia Premier Darrell Dexter declined to comment on a media report that they are attending the announcement at 5 Wing Goose Bay.

The once bustling military airbase is now mostly vacant. News of Mr. Harper's visit had raised hopes that he might keep a pledge to increase the number of uniformed personnel at the site, which now has about 80. He has talked in the past of a new rapid-reaction team or perhaps flying unmanned drones from 5 Wing, but has not acted.

Friday's announcement appears to have been a hastily arranged affair, with sources close to the base saying late Thursday they still hadn't received official details. One source said that staff in embattled Intergovernmental Affairs Minister Peter Penashue's riding office in Labrador still knew nothing about Mr. Harper's visit by Thursday afternoon.

Dubbed the "run and hide minister" by Newfoundland Liberal MP Scott Andrews, Mr. Penashue has been under opposition attack for months for overspending his legal limit in last year's federal campaign.

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He has been accused of buying a narrow win by 79 votes over Liberal incumbent Todd Russell, and of accepting free flights around his sprawling riding along with a questionable campaign loan and corporate donations.

On Thursday during the daily Question Period in the House of Commons, NDP MP Charlie Angus said Mr. Penashue should not be involved in Muskrat Falls talks.

"He received an illegal loan from his brother, then he received a corporate donation from [Newfoundland-based construction company] Pennecon that happened to be in business with his dear brother Max, who happened to score really big on the Muskrat Falls project. Despite the family ties, the minister was the political point man on the project.

"Now that the loan guarantees are being finalized, has that member recused himself from the cabinet discussions about the Muskrat Falls project?"

David Anderson, parliamentary secretary to Natural Resources Minister Joe Oliver, said the federal government "has no role in awarding contracts for the Lower Churchill project at all."

Muskrat Falls will "provide significant economic benefits to the Atlantic region," he said. "It will substantially help to reduce greenhouse gas emissions.

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"Our government continues to support this important project. We are continuing to move forward by providing a loan guarantee."

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