ST. JOHN'S, N.L. — Financing has been secured for Ottawa's third loan guarantee propping up a delay-plagued hydro project in Newfoundland and Labrador.

The province's Crown energy corporation says CIBC has underwritten a $1-billion loan guaranteed by the Canadian government for the Muskrat Falls hydroelectricity project.

Newfoundland and Labrador Hydro said in a release today CIBC has bankrolled the loan through a series of 21 bonds with an effective average interest rate of 3.38 per cent.

The loan guarantee is part of a $5.2-billion bailout for the project aimed at staving off massive electricity rate hikes that would otherwise be necessary to pay bills that come due when the project is producing at full capacity.

The deal was first announced in principle last July, and it includes annual payments to the province equivalent to Canada's net revenue from the Hibernia oil project off St. John's, which will total $3.2 billion.

Muskrat Falls was first approved in 2012 at a cost of $7.4 billion, but the price tag had ballooned to $13.1 billion as of September 2020, and reports say it could still be a year before the project is fully operational.

This report by The Canadian Press was first published March 31, 2022.

The Canadian Press