The Canadian government is backing up to C$3 billion ($2.24 billion) in loans for Trans Mountain Corp (TMC), the crown corporation building an over-budget and long-delayed oil pipeline expansion to Canada’s Pacific Coast.
The information was disclosed on Export Development Canada’s (EDC) website this week, and shows two new loan guarantees signed in late March and early May this year.
Last year Liberal Prime Minister Justin Trudeau’s government, which bought the Trans Mountain pipeline in 2018 to ensure the expansion project got built, provided a C$10 billion loan guarantee to TMC.
The Trans Mountain Expansion will nearly triple the flow of crude from Alberta’s oil sands to Burnaby, British Columbia, to 890,000 barrels per day and is intended to boost access to Asian refining markets.
But the project has been beset by regulatory hurdles, environmental opposition and construction delays and is now expected to cost C$30.9 billion, quadrupling from the C$7.4 billion budgeted in 2017.
Last year Finance Minister Chrystia Freeland said no more public money would be invested in the project, and TMC has said it is seeking external financing. The government intends to sell Trans Mountain once the expansion is complete but many analysts say it will not be able to recoup the full cost of construction.
“With the project so over-budget, the feds are going to have to sell it at a loss and taxpayers will be on the hook to repay the loans,” said Keith Stewart, a senior energy strategist with Greenpeace Canada.
The Finance Ministry did not immediately respond to a request for comment.
The expanded pipeline is expected to start shipping oil in the first quarter of 2024.
(Reporting by Ismail Shakil and Nia Williams; Editing by Daniel Wallis)