Canada provides new loan guarantees for disputed pipeline

MONTREAL (AFP): The Canadian government has guaranteed billions in new commercial loans to finance the controversial Trans Mountain pipeline project amid growing concerns of huge cost overruns.

The government nationalized the project, running from Alberta province to the Pacific coast, in 2018.

The new loan guarantees — totaling up to Can$3 billion ($2.25 billion) — were agreed in late July but appeared on the government website of Export Development Canada (EDC) only late Friday.

This was the EDC’s third announcement this year of new commercial loan guarantees for the project.

The cost of the pipeline extension, estimated in 2017 at Can$7.4 billion, had soared by this March to Can$30.9 billion.

Last year, with costs rising fast, the federal government announced a new loan guarantee worth Can$10 billion.

Parliament’s budget officer estimated at that time that the project had become a “net loss” for Canada, with construction costs set to exceed its value.

The project has been the source of heated controversy since the beginning.

The project would run alongside an existing pipeline, tripling the capacity for transporting petroleum from the tar sands of Alberta to the Pacific coast for export mainly to Asian markets.

While the petroleum industry in Alberta insists it is needed, ecologists warn of serious risks to the environment, and some Indigenous peoples in British Columbia say it would cut illegally through land they say they govern.

The government of Prime Minister Justin Trudeau in 2018 declared the project to be of “national interest” and took ownership for Can$4.4 billion — infuriating environmental groups.

After repeated delays, work is set to begin next year.