The Trans Mountain pipeline expansion project has provided up to $ 10 billion ($ 7.7 billion) in private sector funding, but comes with a loan guarantee provided by the Canadian government.
Funding was announced after a number of news outlets, including Bloomberg News, inquired about public announcements that appear to indicate that the government has committed billions of dollars to the pipeline project despite a decree by Finance Minister Christie Freeland two months ago spend on it.
These revelations were published on the website of Export Development Canada, a trade promotion agency that manages cash flow on behalf of the government. They also revealed that the government has provided $ 1.75 billion in working capital support to Trans Mountain Pipeline LP, the company that is building an expansion that will double the capacity of the Alberta-British Columbia pipeline.
However, the finance department said on Wednesday that the funds were bridge funding approved in December and were aimed at delaying Trans Mountain until private sector funding was settled. This money has already been paid in full in interest, the government said.
A protest sign stands in front of the Kinder Morgan Inc. facility. in Burnaby, British Columbia on April 11, 2018.
State ownership of the pipeline has embarrassed Prime Minister Justin Trudeau as he promises to achieve ambitious climate change targets, including a 42% reduction in oil and gas emissions by 2030. At the same time, Canada it is now reaping huge economic benefits from its vast oil sector as Russia’s invasion of Ukraine raises commodity prices and helped Canada see record unexpected revenue last month from fossil fuel exports.
In February, when Trans Mountain announced that the cost of building the extension had jumped 70 percent to $ 21.4 billion, Freeland told reporters that the government would not invest more public money in the project.
“No additional public money will be invested in TMC,” Freeland said of the time, citing the company. “TMC will provide the necessary funding to complete the project through funding from third countries, either in public debt markets or with financial institutions.
In a statement on Wednesday, the finance department said the loan guarantee “does not reflect any new public spending” and is “a common practice that introduces an insurance policy for the institutions that have invested in the project.”
“The corporation will pay a fee to the federal government for this guarantee,” the finance department said. “The Canadian government has not spent money to introduce this guarantee.
The Trudeau government bought the pipeline in 2018 from Kinder Morgan Inc. to save the expansion from scrapping due to local political objections and protests from conservationists and local groups. The government has said it intends to sell the pipeline as soon as possible, potentially to groups in the region’s first nations.
The pipeline runs from the oil sands of Alberta to the Pacific coast, and the expansion is planned to increase shipping capacity from about 300,000 barrels per day to more than 800,000 barrels. It is expected to be completed in the third quarter of 2023.
Add Comment