A Canadian government agency has guaranteed fresh commercial loans of up to C$3 billion ($2.2 billion) to the controversial Trans Mountain pipeline expansion project that has suffered repeated cost overruns.
The information disclosed by Export Development Canada (EDC) showed that a new loan guarantee of C$2.75-C$3 billion was signed in July, though it first appeared on EDC’s website late on Friday.
Prime Minister Justin Trudeau’s Liberal government bought the Trans Mountain pipeline in 2018 from Kinder Morgan Inc to ensure the expansion project got built and provided a C$10 billion loan guarantee to TMC.
It is meant to unlock Asian markets for Canadian oil, which is mostly exported to the United States now. But the project has been hampered by regulatory obstacles, environmental opposition, and construction delays, and is now anticipated to cost C$30.9 billion, more than quadrupling the C$7.4 billion budgeted in 2017.
The cost blowout and the impact of taxpayer has made the government’s ongoing support a contentious issue. Last year, Finance Minister Chrystia Freeland said that no more public funds would be committed in the project, and TMC has stated that it is looking for external funding.
Critics have also slammed the ownership of a pipeline project by the Liberal government, which they argue runs counter to Trudeau’s ambitious climate goals.
TMC had received a up to C$3 billion loan guarantee between late March and early May this year and had received a C$10 billion loan guarantee in 2022 from the federal government.
Canada’s finance ministry did not immediately respond to a Reuters request for comment on the fresh loan guarantee. In June, a finance ministry spokesperson said the loan guarantee was “common practice” and did not reflect any new public spending.
The project is expected to start shipping oil in the first quarter of 2024, and will nearly tripling the flow of crude from Alberta’s oil sands to Burnaby, British Columbia, to 890,000 barrels per day.
(Reporting by Anirudh Saligrama in Bengaluru Editing by Alistair Bell)