(Calgary) TC Energy is selling a minority stake in its Western Canadian natural gas transmission system to a consortium of Indigenous communities for $1 billion.
The Calgary-based company said the deal, announced Tuesday, will allow 72 Indigenous communities to take a 5.34 per cent stake in its Nova Gas pipeline system and the Foothills pipelines, which together make up a 25,000-kilometre network of natural gas infrastructure assets spanning Western Canada.
The agreement, supported by the Alberta Indigenous Opportunities Corp., was negotiated by a consortium committee representing Indigenous communities in Alberta, British Columbia and Saskatchewan.
Including debt, the deal has a total enterprise value of $1.65 billion, making it the largest Indigenous participation agreement ever concluded in Canada, TC Energy says.
As shareholders, Indigenous communities will receive predictable, long-term cash flows from the pipelines, whose revenues are supported by federally regulated rates.
“We’ve come to a point where we’ve created a partnership that not only prioritizes our needs in our Indigenous communities, but also creates long-term investments in our communities that will extend well beyond mine and yours,” said Lee Thom, a councillor with the Kikino Métis Settlement of Alberta and a member of the consortium committee, during a news conference at TC Energy’s headquarters in Calgary on Tuesday afternoon.
TC Energy President and CEO François Poirier called the agreement a “long-awaited” milestone.
“I’ll put it simply: Aboriginal ownership is the path to a more prosperous nation,” he told reporters. “Aboriginal ownership in Canada’s resource economy should be commonplace. It’s the best way for industries across the country to continue to operate and grow.”
“Imagine if we – Canada, our industry, our company TC Energy – had taken this approach decades ago. Imagine what we could have accomplished, what we could have built together, and how many benefits would have been created for Indigenous communities,” he added.
Chief Isaac Twinn, chair of the consortium committee and chief of the Sawridge Indigenous community near Slave Lake, Alberta, believes that “Indigenous investors will benefit from this partnership for a few more years.”
Growing interest
Indigenous communities across Canada are showing increasing interest in acquiring stakes in major projects and infrastructure to generate revenue and economic opportunities for their populations.
In 2022, for example, Enbridge reached a $1.1 billion deal to sell an 11.57% stake in seven northern Alberta pipelines to 23 First Nations and Métis communities.
Several Indigenous-led groups have also expressed interest in purchasing a stake in the Trans Mountain pipeline, which is currently owned by the federal government.
This interest in shareholding comes at a time when Canada is engaged in a process of reconciliation with Indigenous peoples, a commitment that includes recognizing the right of Indigenous peoples to economic self-determination.
Most of this activity to date has focused on the energy sector in Western Canada, where infrastructure such as oil and gas pipelines, as well as wind and solar farms, are often located on traditional territories of Indigenous peoples.
Energy companies benefit from these deals because “acceptability” within Indigenous communities is increasingly essential for the construction and operation of major projects.
“An unprecedented number of Indigenous communities in Alberta, Saskatchewan and British Columbia have already expressed interest in being part of this partnership,” Alberta Premier Danielle Smith said Tuesday.
“This clearly demonstrates that many Indigenous people support our energy industry – they want to be a part of it.”
But Indigenous communities have historically faced challenges accessing the capital needed for major equity deals. But that is starting to change.
The Alberta Indigenous Opportunities Corp. (AIOC) is an Alberta Crown corporation established in 2019 that provides loan guarantees ranging from $20 million to $250 million for eligible projects. In the case of the agreement with TC Energy announced Tuesday, AIOC will provide communities with a $1 billion equity loan guarantee to support the new investment partnership.
“In just four years, the Alberta Indigenous Opportunities Corporation has made a real impact on Indigenous communities,” Alberta Premier Danielle Smith said in a statement. “This brand new agreement builds on past successes and shows Canada and the world that energy partnerships with First Nations and Métis are not only desirable, but possible.”
Once the agreement is finalized, the communities will enter into definitive agreements as co-investors in the pipeline system. Each community will decide independently whether or not to participate in this agreement.
TC Energy said the transaction is expected to close in the third quarter of this year, but is subject to receipt of band council resolutions and settlement, as well as financing.
In this year’s budget, the federal Liberal government announced the creation of a national Aboriginal loan guarantee program to help communities access capital and remove barriers to equity investment.