(Calgary) The federal government has approved a new loan guarantee of about $10 billion for the Trans Mountain pipeline expansion, a move it says is standard practice and does not represent any additional public funding for the highly publicized pipeline and the budget considered excessive.
Posted at 9:46 p.m.
The Trans Mountain pipeline is the only pipeline system in Canada linking Alberta to the West Coast. It was bought by the federal government in 2018 for $4.5 billion after former owner Kinder Morgan Canada threatened to abandon a planned pipeline expansion due to environmental opposition.
The construction project-which will essentially twin the existing pipeline, thereby increasing daily production to 890,000 barrels-is now 50% complete. However, in February, the company Trans Mountain revealed that the price of the project had risen to 21.4 billion, against an earlier estimate of 12.6 billion.
At the time, Finance Minister Chrystia Freeland said there would be no additional public funding for the pipeline. She said Trans Mountain, a state-owned company, would need to secure third-party financing to complete the project, either through banks or public debt markets.
News of the $10 billion loan guarantee, which was approved by cabinet on April 29 through the state-owned Export Development Canada account, has been criticized by environmental groups and politicians across the country. opposition who see it as a return of Mme Freeland on his word.
“This is a huge new subsidy from a government that promised voters last fall that it would eliminate fossil fuel subsidies,” said Julia Levin of Environmental Defence, adding that critics have pointed out that soaring Trans Mountain prices mean the project is no longer economical. “It also comes just months after Minister Freeland announced to Canadians that there would be no more public spending on Trans Mountain. »
“It was clear from the start that they would pay whatever it cost to get Trans Mountain through,” said NDP MP Charlie Angus.
But on Wednesday, the Department of Finance released a statement saying the federal government had not spent any money to put the new loan guarantee in place.
According to the release, Trans Mountain has secured up to $10 billion in third-party financing for construction costs from a group of Canadian financial institutions. The government provides a loan guarantee on behalf of the company as part of this process.
“This is a common practice that sets up an insurance policy for the institutions that have invested in the project. This does not reflect any new public spending,” the statement said.
The government said there were no changes to the cost estimate presented in February and the estimated 2023 completion date for the pipeline project remained unchanged.