Finance Canada defends $10 billion loan guarantee for Trans Mountain |  CBC News

Finance Canada defends $10 billion loan guarantee for Trans Mountain | CBC News

The Canada Finance Agency is defending a $10 billion loan guarantee for Trans Mountain to help the company finish a pipeline expansion after opposition parties and environmental groups described it as fossil fuel subsidies.

The financial support comes after the government said in February that no more public funds would be injected into the project.

“This is a common practice setting up an insurance policy for institutions that have invested in the project – and it does not reflect any new public spending,” press release From Canada Finance said. The Government of Canada has not spent any money to implement this guarantee.

I mentioned Politico for the first time The government was providing loan guarantee.

At Parliament House, CBC reporters asked Finance Minister Chrystia Freeland several times about new federal support for Trans Mountain. The minister did not stop to answer questions.

Deputy Prime Minister and Finance Minister Chrystia Freeland passes through reporters as they arrive for a caucus meeting at Parliament House in Ottawa on Wednesday, May 11, 2022. (Canadian Press / Justin Tang)

In February, Freeland announced that costs for its Trans Mountain pipeline expansion project had nearly tripled from its initial $7.4 billion price — which then-owner Kinder Morgan had forecast in 2018 — to $21.4 billion.

“I want to assure Canadians that no additional public money will be invested in Trans Mountain,” Freeland said at the time.

“(Trans Mountain) will secure the financing needed to complete the project through third-party financing, either in the public debt markets or with financial institutions.”

Ottawa provided bridge financing for the pipeline in December

On Wednesday, Finance Canada confirmed that Trans Mountain “has now secured up to $10 billion in third-party funding with a consortium of Canadian financial institutions.”

The statement did not name the institutions funding the pipeline’s completion, but says Trans Mountain will pay a fee to the government for the loan guarantee.

The statement also said that Ottawa provided $1.75 billion in “bridge financing” in December to ensure construction continued on schedule. Finance Canada said in its statement that the loan had been “repaid in full with interest”.

After reaching for comment, Trans Mountain referred CBC to the government’s statement.

Following news of the loan guarantee, opposition parties attacked the federal government for continuing to provide financial support for the now overbudgeted and overdue Trans Mountain pipeline expansion project.

“This government has done a terrible job,” said Kyle Seaback, a Tory environmental critic. “They don’t do the hard work of figuring out how much these things cost.”

“This is yet another boost to the oil and gas industry when this government says it’s planning to walk away,” said Green MP Mike Morris.

Environmental groups described the loan as a subsidy, citing the World Trade Organization’s definition of the word.

“This is a continuation of our government’s support for this project that is no longer financially viable,” said Sven Biggs, Canadian Oil and Gas Program Director at Stand.earth.

The Institute for Energy Economics and Financial Analysis, which conducted the financial analysis of the pipeline, said the TMX project has not attracted private sector investment and must rely on government support to continue.

said Omar Mogi, energy finance analyst with the Institute for Energy Economics and Financial Analysis.

Twining the 1,150-kilometre Trans Mountain pipeline will nearly triple its capacity to an estimated 890,000 barrels per day, and could increase crude tanker traffic from Westridge Naval Terminal from about three ships per month to one per day. . (CBC)

Construction of the Trans Mountain expansion is expected to be completed by June 30, 2023, nine months after the revised schedule. The pipeline was supposed to be completed by September 30, 2022.

The pipeline will not start shipping oil until the Canadian energy regulator gives it final permission to operate. Trans Mountain said the pipeline won’t see its first revenue until September 30, 2023.

As of April, the project was nearly 50 percent complete. Upon completion, the pipeline’s production will increase from about 300,000 barrels per day to about 890,000.

2022-05-11 22:26:44

Leave a Comment

Your email address will not be published. Required fields are marked *