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TC Energy Pledges Up to $3.3 Billion to Cover Coastal GasLink Costs

Bridge financing of up to $3.3 billion has been committed by the Calgary-based company to cover huge costs associated with the Coastal GasLink project.

An ongoing dispute between TC Energy Corp. and LNG Canada over projected cost increases and their potential impact on schedule has been revealed. TC Energy, on the other hand, claims that construction on the project is currently more than 50% complete.

In a conference call with financial analysts, Tracy Robinson, TC Energy’s executive vice president and president of Coastal GasLink, said “We can’t, of course, discuss the details of any discussions on cost and schedule and the issues between us because they’re confidential. But what I can say is that we’re very hopeful that ultimately, we’re going to reach an agreement between us on those issues.”

Canada chose TC Energy to design, build, own, and operate Coastal Gaslink in 2011. The 670 km pipeline will transport 2.1 bcf/d of natural gas to LNG Canada’s terminal to be converted into a liquefied state and export to global markets.

Construction began in 2019 and is expected to be completed in 2023. To be sure, permit delays and the effects of COVID-19 – including a British Columbia provincial health order that temporarily halted construction – have increased costs and possibly delayed project completion, according to TC Energy previously this year.

TC Energy said it had already provided $840 million in short-term credit to the project on Sept. 30, 2021. Following the full repayment in October, additional draws total of $175 million as of October 29. The company has also committed to providing up to $3.3 billion in additional temporary financing if required.

“I think it’s important to note, though, if that ($3.3 billion) were required that we would earn a return on that investment,” said Joel Hunter, TC Energy’s chief financial officer. “It would be viewed as temporary.”

According to Denita McKnight, LNG Canada’s senior director of corporate affairs, the company remains concerned with proposed cost increases and schedule delays from TC Energy, which she says are well beyond what the company agreed to when it made its final investment decision in 2018.

“We are working toward a commercial solution with respect to how increased costs are addressed moving forward. We have not seen evidence that supports the forecasted cost increases,” McKnight said. According to McKnight, the pipeline will be ready for its first LNG cargo by the middle of this century.

In the third quarter, TC Energy reported a profit of $779 million, down from $904 million in the same period of last year. The pipeline company’s profit for the third quarter ended September 30 was 80 cents per share, down from 96 cents per share in 2020.

The quarter’s revenue was $3.24 billion, an increase from $3.20 billion.

TC Energy cut its annual dividend growth forecast on Friday. Dividend growth of three to five percent is now the company’s goal for the next three to five years.

Original source material for this article taken from here

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Written by Olivia Woods

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