The Canadian government has guaranteed another C$1 billion ($731 million) in commercial loans for the Trans Mountain pipeline expansion, taking the total government-backed loan facility to C$19 billion, Trans Mountain’s quarterly earnings statement showed on Thursday.
The expansion project, which has so far cost C$34 billion, nearly triples capacity to ship oil from Alberta to Canada’s Pacific coast to 890,000 barrels per day. It started commercial operations on May 1 after years of delay.
Prime Minister Justin Trudeau’s Liberal government bought the pipeline from Kinder Morgan Inc in 2018 to ensure the project went ahead.
In 2022, as costs soared to roughly three times the original budget, Ottawa said it would no longer finance the expansion with public money. Since 2022, costs have jumped more than another C$12 billion.
However, the government did provide a loan guarantee to Trans Mountain Corp (TMC), which helped the crown corporation enter into a credit agreement with a syndicate of commercial lenders.
The government’s backing reduces the risk to lenders and would help TMC secure loans at lower interest rates.
The credit available to TMC from the syndicate increased to C$19 billion on May 17 and the maturity date has been extended to August 2026, TMC said in its first-quarter results statement.
At the end of 2023, TMC had total available credit of C$18 billion that matured in March 2025 but said additional funding was required, resulting in “material uncertainty that cast substantial doubt” on TMC’s ability to continue as a going concern.
“The increase to the facility included a corresponding increase to the guarantee provided from the Government of Canada,” TMC’s statement said.
(Reporting by Nia Williams in British Columbia; Editing by Leslie Adler and Lincoln Feast.)