Trans Mountain given more billion-dollar lifelines as debt costs, risks to taxpayers soar

The federal government has quietly guaranteed between $1.75 billion and $2 billion in new commercial bank loans for the Trans Mountain Corporation so it will have enough cash to complete its long-delayed and massively over budget West Coast pipeline expansion.

If that money is borrowed, the project’s total cost to the government will now sit at around $35 billion, seven times more than what Ottawa paid in 2018 to acquire the existing Kinder Morgan pipeline that was built in the 1950s as well as plans for its future expansion project.

The new loans – which will ensure the corporation has enough cash to complete construction; put the new pipeline in service; and start carrying greater volumes of oil later in 2024 – are guaranteed through the “Canada Account” at the Export Development Corporation (EDC). The information was posted to the website of the EDC, a federal Crown corporation, on the Friday before Christmas.

The Canada Account is a federal-government vehicle used to fund political projects that “are determined by the Minister for International Trade to be in Canada’s national interest,” according to the EDC’s website.

Canada Account loans often involve projects that commercial banks wouldn’t otherwise finance or approve without government backstopping because the projects carry too much financial and other risks for private lenders to assume alone.

The new loan guarantees come at the same time Trans Mountain quietly wrote off over $1 billion on the $4.7 billion which the government paid to acquire the company in 2018, Global News has learned.

It calls this a “goodwill impairment expense.”

The write off and new loans come as the Liberal government is preparing to put the expanded pipeline into service in the spring of 2024