A control budget to build the 695MW Keeyask generating station, which is being constructed on the Nelson River in northern Manitoba, has been increased from $6.5bn to $8.7bn.

The Keeyask Hydropower Limited Partnership (KHLP) and Manitoba Hydro have also announced a new commissioning date of August 2021 for the hydropower project, which is currently under construction.

The current timeline represents a 21-month delay from the earlier in-service date of November 2019.

Keeyask generating station is owned by the KHLP, which is a joint venture of Manitoba Hydro and four First Nations such as Tataskweyak Cree Nation, Fox Lake Cree Nation, York Factory First Nation and War Lake First Nation.

KHLP has awarded contract to Manitoba Hydro to construct and operate the project.

The potential for an increase in the cost estimate for the project has been first identified in the Manitoba Hydro-Electric Board's (MHEB) review of capital projects completed in the fall of last year.

The review, which was carried out by Boston Consulting Group (BCG) for MHEB, estimated that the cost for the project will increase up to a possible $7.8bn, along with a potential delay in completion of up to 31 months.

According to Manitoba Hydro, the new control budget comprises an additional $900m in contingency funds, interest and escalation not featured in the BCG analysis.

KHLP board chair Lorne Midford said: "The new control budget and revised in-service date developed by Manitoba Hydro has been presented to the KHLP board.

"Manitoba Hydro continues to work with its Keeyask partners to evaluate the impact of the cost and schedule changes to each partner's interests in the project."

In July 2014, the construction was started on the Keeyask generating station, which will provide renewable hydroelectricity to meet future demand in Manitoba and export markets.