With an estimated $10 billion loan guarantee authorized, the federal government argues this is standard practice and does not reflect any further public support for the high-profile, over-budget oil pipeline.
The pipeline is Canada’s only oil pipeline system from Alberta to the West Coast. When Kinder Morgan Canada Inc. threatened to cancel the pipeline’s expansion project through environmentalist opposition, the federal government purchased the pipeline for $4.5 billion.
The pipeline expansion, which would double current production to 890,000 barrels per day, is currently 50% complete. A recent increase in costs by Trans Mountain Corp. to $21.4 billion from a previous estimate of $12.6 billion was reported in February.
Finance Minister Chrystia Freeland said at the time that there would be no more public financing for this project and that Trans Mountain needed to acquire third-party financing from banks or public debt markets in order to complete the project.
Environmental groups and opposition politicians have condemned the $10 billion loan guarantee, authorized by the cabinet on April 29 through the Canada Account at Crown corporation Export Development Canada, as Freeland going back on her 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. “It also comes just a few months after Minister Freeland told Canadians that there would be no more public spending on TMX.”
“It was clear from the get-go they’re going to pay whatever it costs to get TMX through,” said NDP Charlie Angus.
However, the Department of Finance announced on Wednesday that no money has been paid by the federal government to implement the new loan guarantee.
The government has stated that the cost estimate provided in February has not changed, and the pipeline project’s expected completion date of 2023 remains intact.
Third-party financing for construction costs from a group of Canadian financial institutions totalling up to $10 billion has been secured by Trans Mountain, and the government is offering a loan guarantee on behalf of the company as part of that process, according to a statement from the government.
“This is a common practice which puts in place an insurance policy for the institutions that have invested in the project — it does not reflect any new public spending,” the statement said.
Original source material for this article taken from here