The Canadian government is supporting Trans Mountain Corp (TMC), responsible for developing an oil pipeline expansion to Canada’s Pacific Coast, by providing loan guarantees of up to C$3 billion ($2.24 billion).
Export Development Canada’s (EDC) website recently revealed that two loan guarantees were signed by the government in March and May. These guarantees aim to secure the necessary funding for the Trans Mountain pipeline expansion.
In 2018, the Trans Mountain pipeline was purchased by the government under Prime Minister Justin Trudeau’s administration to ensure the completion of the expansion. The Canadian government guaranteed a loan of $10 billion as part of this initiative.
The Trans Mountain Expansion project plans to bring 890,000 barrels per day of crude oil from Alberta’s oil sands to Burnaby, British Columbia, with the purpose of facilitating access to the Asian refining sector. Regulations, environmental opposition, and construction delays have all delayed the development of the project.
The estimated cost has increased from C$7.4 billion in 2017 to C$30.9 billion.
Last year, Finance Minister Chrystia Freeland announced that the government will not provide any more public funding for the project. As a result, TMC has been actively looking for other financing to support the initiative.
Freeland clarified that the loan guarantee provided is standard practice and does not indicate new public expenditures. TMC is paying a fee to the government in exchange for the loan guarantee. The government has indicated its intention to sell off its stake in the project in the near future as it does not plan to keep it as a permanent asset.
The expanded pipeline is scheduled to start oil shipments in the first quarter of 2024.