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The federal government is once again putting taxpayer dollars on the line to prop up the Trans Mountain pipeline expansion (TMX).
This week it came to light that the federal government approved two loan guarantees (one on March 24 and one on May 2) backing the additional $3 billion Canada’s biggest big banks recently loaned the Crown corporation.
This is a repeat of last year, when those same big banks agreed to loan Trans Mountain $10 billion to cover ballooning construction costs. The federal government greenlit a loan guarantee for the same amount — which means if Trans Mountain can’t repay the banks, Canadian taxpayers will foot the bill. So far, the public loan guarantees on the project total $13 billion.
This likely won’t be the last time we see Canada’s big banks finance TMX and the federal government backstop the banks’ loans with public dollars, said Keith Stewart, senior energy strategist at Greenpeace.
“They still don’t have enough money to finish it, even with this new money, so it will definitely happen again,” said Stewart in a written statement to Canada’s National Observer. In March, Trans Mountain reported construction of the project “is close to 80 per cent complete,” and the company expects the pipeline to be operational in the first quarter of 2024.
Finance Canada did not immediately respond to a request for comment. Finance Minister Chrystia Freeland said in February 2022 that no new public funds would flow to the project, and while this is technically true for now, if Trans Mountain is unable to repay the banks, the loan guarantees will kick in and taxpayers will be left holding the bag.
“The Ministry of Finance is engaging in semantics when they say a loan guarantee isn’t new public money,” said Stewart. “The costs have quadrupled while the amount oil companies will pay to use it is capped, so it will get sold for a multi-billion dollar loss and the public that guaranteed the loans will be on the hook.”
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