Pipes for the Trans Mountain pipeline project are seen at a storage facility near Hope, B.C., Tuesday, Sept. 1, 2020.The federal government has approved a new, approximately $10-billion loan guarantee for the pipeline project. THE CANADIAN PRESS/Jonathan Hayward

By Amanda Stephenson in Calgary

OTTAWA – The federal government has approved a new, approximately $10-billion loan guarantee for the Trans Mountain pipeline expansion, a move it says is common practice and does not reflect any additional public funding for the high-profile, over-budget oil pipeline.

The Trans Mountain pipeline is Canada’s only oil pipeline system from Alberta to the West Coast. It was bought by the federal government in 2018 for $4.5 billion after previous owner Kinder Morgan Canada Inc. threatened to scrap the pipeline’s planned expansion project in the face of environmentalist opposition.

The construction project — which will essentially twin the existing pipeline, raising daily output to 890,000 barrels — is now 50 per cent complete. However, in February, Trans Mountain Corp. revealed that the project’s price tag has ballooned to $21.4 billion, up from an earlier estimate of $12.6 billion.

At that time, Finance Minister Chrystia Freeland said that there would be no additional public funding for the pipeline. She said Trans Mountain, a Crown corporation, would need to secure third-party funding to complete the project, either through banks or public debt markets.

News of the $10-billion loan guarantee, which was approved by cabinet on April 29 through the Canada Account at Crown corporation Export Development Canada, has been criticized by environmental groups and opposition politicians who see it 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, adding critics have suggested that Trans Mountain’s skyrocketing price tag means the project is no longer economical. “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.

But on Wednesday, the Department of Finance issued a statement saying that the federal government has not spent any money to put the new loan guarantee in place.

The statement said Trans Mountain has secured up to $10 billion in third-party financing for construction costs from a group of Canadian financial institutions, and the government is providing a loan guarantee on behalf of the corporation as part of that process.

“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.

The government said there have been no changes to the cost estimate outlined in February and the estimated 2023 completion date for the pipeline project remains in place.

– With files from Mia Rabson in Ottawa

This report by The Canadian Press was first published May 11, 2022.

News from © The Canadian Press, 2022. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • 0062 TED_EPAC_Technology_30
    0062 TED_EPAC_Technology_30
  • 0061 SIMSA 2024 For Sask Buy Sask
    0061 SIMSA 2024 For Sask Buy Sask
  • 0060 Arizona Lithium Lease building
    0060 Arizona Lithium Lease building
  • 0059 Southeast College Heavy Equipment Operator
    0059 Southeast College Heavy Equipment Operator
  • 0058 Royal Helium Steveville opens anonymous rocket
    0058 Royal Helium Steveville opens anonymous rocket
  • 9002 Pipeline Online 30 sec EBEX
    9002 Pipeline Online 30 sec EBEX
  • 0055 Smart Power Be Smart with your Power office
    0055 Smart Power Be Smart with your Power office
  • 0015 Latus Viro
    0015 Latus Viro
  • 0052 Predator Inspections
    0052 Predator Inspections
  • 0051 JML Hiring Pumpjack assembly
    0051 JML Hiring Pumpjack assembly
  • 0049 Scotsburn Dental soft guitar
    0049 Scotsburn Dental soft guitar
  • 0046 City of Estevan This is Estevan
    0046 City of Estevan This is Estevan
  • 0041 DEEP Since 2018 now we are going to build
    0041 DEEP Since 2018 now we are going to build
  • 0032 IWS Summer hiring rock trailer music
  • 0022 Grimes winter hiring
  • 0021 OSY Rentals S8 Promo
  • 0018 IWS Hiring Royal Summer
  • 0013 Panther Drilling PO ad 03 top drive rigs
  • 0011
  • 0006 JK Junior
  • 9001
  • 0002