Canadian Agency’s $2.2 Billion Loan Guarantee for Trans Mountain Pipeline Expansion

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Export Development Canada (EDC) has guaranteed up to C$3 billion ($2.2 billion) in additional commercial financing for the controversial Trans Mountain pipeline expansion project. EDC disclosed the loan guarantee agreed in July on their website. The Canadian government purchased the Trans Mountain pipeline from Kinder Morgan Inc (KMI.N) in 2018 to ensure the expansion project’s completion. The government also provided TMC with a $10 billion loan guarantee. The project aims to introduce Canadian oil, which is presently primarily exported to the United States, to Asian markets.

However, the expansion project has encountered difficulties, such as regulatory obstacles, environmental opposition, and construction delays. The estimated cost of the project has risen to C$30,9 billion, significantly exceeding the 2017 budget of C$7.4 billion. This substantial cost overrun and the use of taxpayer funds have generated controversy regarding the government’s continued support for the initiative.

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Pipeline Ownership vs. Climate Objectives: Critiques of Liberal Government’s Approach

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Photo by: Trans Mountain via The Tyee

Critics have noted that the Liberal government’s ownership of the pipeline contradicts Prime Minister Justin Trudeau’s climate objectives. Minister of Finance Chrystia Freeland stated a year ago that no additional public funds would be allocated to the project, and TMC has since sought external funding. Earlier this year, TMC secured a loan guarantee of up to C$3 billion from the federal government, and in 2022, it received a loan guarantee of C$10 billion.

The Canadian Ministry of Finance has yet to comment on the latest loan guarantee. Previously, a ministry spokesperson stated that loan guarantees are commonplace and do not represent new public expenditure. The expansion of the Trans Mountain pipeline is anticipated to commence oil transport in the first quarter of 2024. It aims to roughly treble the crude oil movement from the oil sands of Alberta to Burnaby, British Columbia, to 890,000 barrels on each day.

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Source: Clayton County Register, Reuters

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