Massive wind farm project won't get blown away by financial stress: Manitoba
Published Thursday November 27th, 2008
B5Mary Agnes Welch
The Australian company that's building and financing Manitoba's new wind farm - slated to be the biggest in Canada - is nearing financial collapse, but the Manitoba government says there's nothing to worry about.
Babcock & Brown, a Sydney-based mega-company specializing in infrastructure and real-estate investments, plans to build an $800-million wind farm near St. Joseph, Man., which will see 130 turbines sprout up along the highway to the U.S. border.
St. Joseph is located about 75 kilometres south of Winnipeg.
At 300 megawatts, the site would be the biggest wind farm in Canada and a boon to area towns, but critics say it's been slow to get going. The province's opposition Tories fear the company's financial troubles could cause even more delays.
It's been nearly two years since Manitoba Hydro first issued a tender for the wind farm and almost eight months since Babcock & Brown beat out 83 other bids.
Now, Babcock & Brown is struggling to survive. According to Australian news reports, the company halted trading last week, is $3.1 billion in debt and has seen senior executives and board directors resign in steady succession. Australian pundits said Sunday the company is in its "death throes" and grinding toward receivership, perhaps as early as this week.
But Manitoba Hydro CEO Bob Brennan and the provincial government said the company's North American energy division is solid and the company offered the cheapest and most reliable power of any of the 84 bidders. And they said Hydro doesn't pay Babcock & Brown a cent until the electricity starts flowing.
"There is no risk to Manitoba Hydro in the cost and financing of this project," said Finance Minister Greg Selinger on Monday.
"Hydro only has risk the minute they decide to purchase the power and when they purchase the power they already have a market for it."
Babcock & Brown's Colin Edwards said his company's North American energy group is "extraordinarily strong" and sends capital to the parent company instead of relying on it for money.
Still to come is a formal power purchase agreement spanning 25 years, which the company hopes to have in place early in the new year.
The project is getting a late start, but Edwards said it won't be late opening.
The company, along with its Calgary-based partner, BowArk Energy, hoped to start construction this fall. But building will now start next year, with turbines arriving in 2010. The turbines must start pumping out power by March 2011 or the project won't qualify for federal eco subsidies, said Edwards.
http://nbbusinessjournal.canadaeast.com/journal/article/493911
BNB
babcock & brown limited
