A briefing paper summarizing the story of the sanitation of the Muskrat Falls hydroelectric project – developed by Nalcor Energy for its legal adviser McInnes Cooper – was re-introduced in connection with the Muskrat Falls survey.
Jason Kean, former Deputy Chief Executive Officer and one of the lead authors of the documentary, learned the question.
Kean was asked to read aloud the message from the report.
"The value of $ 6.2 billion would be sanctioned by the project or original DG3 project budget control and contained a P50 reserve estimate without reserve for strategic risk, time risk or foreign exchange risk," he said.
The question was that a "strategic risk" that is not included is estimated at around $ 500 million.
"$ 6.2 billion was internally characterized by the project team as an aggressive cost base because there was no margin for the identified strategic exposure," Kean said on the stand and read from the document.
The questionnaire was told that the amount to cover the strategic risk was removed during the talks with Emer, given that the amount could be returned and considered in the final estimate of the public costs for Newfoundland and Labrador.
"But that was not enough to keep the estimate of $ 6.2 billion due to Nalcor Executive's desire," Kean read.
She answered questions from Kate O'Brien, coordinator for questions, explaining that "Nalcor Executive" concerns "primarily Mr. Gilbert Bennett and Mr. Martin Ed." And when he talked about the project management team, he thought of team members like Paul Harrington, Lance Clarke, Scott O'Brien, Ron Power, and potentially others.
He said the 6.2 billion dollars audited in 2012 included an estimate of extraordinary events, but he confirmed that he did not deal with all the risk exposure to the project.
While some of the identified risks were "greatly mitigated," Kean said, it was possible that there might be "some uncanned or unknown event that might appear," but without the dollars to cover it.
Kean said he would understand that the shareholder, the provincial government, would eventually "stop" the project and cover the bill if the risk changed to reality.
He said that Bennett and Martin were aware of other risks outside of what was covered by the public estimation, and the other members of the project management team were the same but could not speak with the level of knowledge about other Nalcor Energy directors, such as Chief Financial Officer Derrick Sturge or the Board of Directors of Nalcor Energy.
Kean submitted Manitoba Hydro International (MHI) and Independent Project Review (IPR) information during his reviews at Muskrat Falls. But the investigation was presented with evidence. MHI did not address the project's risk as part of its tasks, and the conclusions on intellectual property rights were not included in the details of the final package of "decision-making gate three" which was sent to the Nalcor Board.
"As I said, I remember (Bennett and Martin) because I met some direct engagement with them, but as the information flowed after I introduced them, I have no idea," Kean said.
Incomplete & # 39;
He was also asked to receive a report from John Hollmann of Validation Estimating LLC, looking at the "decision gate three" capital costs. The report was dated April 9, 2012.
It was labeled "DRAFT" and Kean said that the final version had never been submitted because it cut off another review. He described it as just the control he wanted, "peer review". And "I feel we had what we needed," Kean said, why the final report was not required.
O Brien asked how the draft report was used. She recorded a quote that appeared at Nalcor Energy presentations and described the estimated cost of Muskrat Falls as "one of the best estimates of mega-projects" in some time periods.
Kean said he could not speak with this note everywhere.
He acknowledged that it was not remarked that it was from the draft report.
The full quote reads: "First of all, it should be noted that although it is not perfect, the estimate (project) in its current state is one of the best" basic "estimates of mega-projects that this reviewer recorded at some time.
Brian stressed "not perfect" in questions. She suggested – the message was not widely distributed – people like former Treasury Secretary Tom Marshall and the Nalcor Energy Board would also have not heard more critical comments on the "obfuscation" of the project team by using non-standard terms, "confused" risk references and "weak logic for handling risky costs, "with no reserve for a project-specific risk that was 100 percent probable.
Kean returns to the morning start (9:00 NT) on Thursday to finish the O Brian test and start the cross exam. She is the last witness scheduled for this week.
Demand Muskrat Falls