June 2, 2023 [Reuters]- The Canadian government is backing up to C$3 billion ($2.24 billion) in loans for Trans Mountain Corp (TMC), the crown corporation building an over-budget and long-delayed oil pipeline expansion to Canada’s Pacific Coast.

The information was disclosed on Export Development Canada’s (EDC) website this week, and shows two new loan guarantees signed in late March and early May.

Last year Liberal Prime Minister Justin Trudeau’s government, which bought the Trans Mountain pipeline in 2018 to ensure the expansion project got built, provided a C$10 billion loan guarantee to TMC.

The Trans Mountain Expansion will nearly triple the flow of crude from Alberta’s oil sands to Burnaby, British Columbia, to 890,000 barrels per day and is intended to boost access to Asian refining markets.

But the project has been beset by regulatory hurdles, environmental opposition and construction delays and is now expected to cost C$30.9 billion, quadrupling from the C$7.4 billion budgeted in 2017.

Last year Finance Minister Chrystia Freeland said no more public money would be invested in the project, and TMC has said it is seeking external financing.

Finance Ministry spokeswoman Marie-France Faucher said the loan guarantee was “common practice” and did not reflect any new public spending. TMC is paying a fee to the government for the loan guarantee, she said.

“The federal government does not intend to be the long-term owner of the project and will launch a divestment process in due course,” Faucher said in a statement, adding the project remains commercially viable.

Many analysts say TMC will not be able to recoup the full cost of construction when it sells the pipeline. Morningstar analyst Stephen Ellis estimated the pipeline will be worth around C$15 billion once it is completed.

“With the project so over-budget, the feds are going to have to sell it at a loss and taxpayers will be on the hook to repay the loans,” said Keith Stewart, a senior energy strategist with Greenpeace Canada.

The expanded pipeline is expected to start shipping oil in the first quarter of 2024.

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