The federal government is reportedly looking to sell an unspecified stake in the taxpayer-owned Trans Mountain pipeline to indigenous groups through a special purpose vehicle that will allow individual communities to buy into the troubled tubular..According to a letter obtained by Bloomberg, dated Aug. 2, Minister of Finance Chrystia Freeland’s office said the government would provide access to capital so First Nations groups wouldn’t have to risk any of their own money to obtain an equity interest and governing rights. .That might partly explain why the Canada Export and Development Corporation last week backstopped a $3 billion loan guarantee despite Freeland’s insistence that the government wouldn’t put any new money into the project..Freeland’s office declined to comment.. TransMountain (TMX) expansion routeTransMountain (TMX) expansion route .The Trudeau government bought the troubled line in 2018 for $4.5 billion. The cost of completing the expansion to the West Coast has quadrupled to about $30 billion from an initial estimate of $7.4 billion since that time..It’s about 85% complete, awaiting first oil sometime early next year. Once complete it will nearly triple the existing capacity of the line to about 890,000 barrels per day and provide Alberta’s oil industry with much-needed tidewater access..Earlier this summer it applied to the Canadian Energy Regulator to impose a new tolling structure that aims to recover a portion of those additional costs from shippers. .Not surprisingly, the companies led by the likes of Canadian Natural Resources, Suncor and Cenovus have all opposed it and the matter is headed to a public hearing after the CER ruled in favour of the shippers in a decision posted on Aug. 1 to its website..Critics claim the onerous tolls to ship the oil to Trans Mountain’s Burnaby terminal effectively render it uneconomic before it even ships its first barrel. That’s because producers would find it cheaper to ship oil to the Gulf Coast and send it to China via the Panama Canal. Or break contracts with Trans Mountain and leave the oil in the ground..Details of the hearing have yet to be determined but the regulator said it agrees “the magnitude of the cost increases for the Trans Mountain Expansion Project and the potential implications of those costs on tolls” warrants a special review..While some native groups have opposed the project — taking it to the Supreme Court — others have expressed an interest in becoming business partners even though it seems likely the federal government will at some point be forced to take a multi-billion dollar write down on the value of the assets..Despite all the uncertainties, RBN Energy analyst, Martin King, still thinks Trans Mountain could be competitive shipping it to the US given what he calls the “locational advantage” afforded by being on the West Coast..“Despite what might seem to be larger-than-average challenges for exporting heavy crude oil from (Vancouver), there are still a couple of advantages,” he wrote in a blog.
