Monetary loan

Trudeau Pipeline secures $7.7 billion government-backed loan | Rigzone

The Trans Mountain pipeline expansion project has secured up to C$10 billion ($7.7 billion) in private sector financing, but it comes with a loan guarantee provided by the Canadian government.

The funding was announced after several news outlets, including Bloomberg News, inquired about public disclosures appearing to show the government was committing billions of dollars to the pipeline project despite Finance Minister Chrystia Freeland’s edict there. two months that no more public money would be spent.

These disclosures were posted on the website of Export Development Canada, a trade promotion agency that administers the flow of money on behalf of the government. They also showed the government had offered C$1.75 billion in “working capital support” to Trans Mountain Pipeline LP, the entity building an expansion that will more than double the capacity of the pipeline between the Alberta and British Columbia.

However, the Department of Finance said Wednesday that the funds were bridge financing approved in December and intended to tide over Trans Mountain until private sector financing is arranged. That money has now been repaid in full with interest, the government said.

State ownership of the pipeline has put Prime Minister Justin Trudeau in an awkward position as he promises to meet ambitious climate change goals, including mandating a 42% cut in emissions from the oil and gas sector. gas by 2030. At the same time, Canada is now reaping huge economic benefits from its vast oil sector, as Russia’s invasion of Ukraine has driven up commodity prices and helped the Canada to record a record bonanza last month for its fossil fuel exports.

In February, as Trans Mountain announced that the construction cost of the expansion had jumped 70% to C$21.4 billion, Freeland told reporters that the government would no longer invest public funds in the project. .

“There will be no additional public money invested in TMC,” Freeland said at the time, referring to the company. “TMC will secure the necessary financing to complete the project through third-party financing, either in the public debt markets or from financial institutions.”

In Wednesday’s statement, the finance ministry said the loan guarantee “does not reflect any new public spending” and is “a standard practice that puts in place an insurance policy for institutions that have invested in the project.” .

“The company will pay a fee to the federal government for this guarantee,” the Department of Finance said. “The Government of Canada has not spent any money to put this guarantee in place.

The Trudeau government purchased the pipeline in 2018 from Kinder Morgan Inc. to prevent the expansion from being scrapped due to local political objections and protests from environmentalists and Indigenous groups. The government has said it intends to sell the pipeline as soon as reasonably possible, eventually to local First Nations groups.

The pipeline runs from the Alberta oil sands to the Pacific coast, and the expansion is planned to increase transportation capacity from around 300,000 barrels per day to more than 800,000. It is expected to be completed in the third quarter. 2023.