Federal Government Guarantees $3 Billion in Trans Mountain Development Loans

After years of cost overruns and controversy, the Canadian government has guaranteed new commercial loans of up to C$3 billion ($2.2 billion) for the Trans Mountain pipeline expansion project.

On Friday, Export Development Canada (EDC) said that a new loan guarantee of C$2.75–C$3 billion was signed in July.

The Liberal government of Prime Minister Justin Trudeau purchased the Trans Mountain pipeline from Kinder Morgan Inc. in 2018. It guaranteed a C$10 billion loan to TMC to complete the expansion project.

The purpose of the deal is to increase demand in Asia for Canadian oil, which is currently shipped mainly to the United States. Due to regulatory roadblocks, environmental opposition, and delays in construction, the original 2017 budget of C$7.4 billion has increased to an estimated C$30.9 billion.

Governmental support has become controversial due to excess costs and the resulting impact on taxpayers. TMC has claimed it is looking for additional funding after Finance Minister Chrystia Freeland announced last year that no more funding from the government would be committed to the project.

The Canadian government guaranteed loans worth C$10 billion to TMC in 2022 and up to C$3 billion to TMC in late March and early May of this year.

A representative for the Ministry of Finance explained in June that the loan guarantee was “common practice” and did not represent an increase in government spending.

Shipping is expected to begin in the first quarter of 2024. The project will approximately triple the current flow of crude from Alberta’s oil sands to Burnaby, British Columbia, to 890,000 barrels per day.