The People's Pipeline is over budget... quel suprise
The overbudget Trans Mountain pipeline project is carrying $23B in debt — and needs to borrow more
Pipeline watchers say Ottawa may need to take a haircut if it wants to find a buyer
The overbudget Trans Mountain expansion project owes its lenders at least $23 billion and is looking to take on more private debt as the federal government shuts its wallet and construction costs skyrocket.
CBC has reviewed newly released documents from Trans Mountain and another federal government entity. They show the expansion project is burning through cash and needs to borrow billions of dollars more to finish the work, which the company says was almost 80 per cent complete as of March.
"The business is significantly leveraged with debt," Trans Mountain's updatedcorporate plan says.
That same plan says Trans Mountain will need to borrow more to cover anticipated work in 2023 on pipeline sections and terminals.
The expansion project will twin the existing pipeline, raising daily output to 890,000 barrels.
Financial statements from the Canadian Development Investment Corporation (CDEV), the federal Crown corporation that owns the pipeline project, flag Trans Mountain's growing liabilities as a financial risk — especially since the pipeline now must turn to private lenders.
When Trans Mountain's costs surged again in February 2022, Finance Minister Chrystia Freeland said the government was committed to completing the project but would commit no more public money to it.
The documents show Trans Mountain had secured at least $10 billion in credit from Canada's big private banks as of December 2022. Trans Mountain says it still needs to borrow billions more. The rest of its debt is held by the Government of Canada.
CDEV warns Trans Mountain has "no assurance" of receiving more private financing and there is "material uncertainty" about Trans Mountain having "sufficient" financial resources to meet its obligation in 2023.
Trans Mountain warns in its corporate plan that if new funding is not secured, "construction of TMEP (Trans Mountain Expansion Project) will need to be stopped, workers laid-off, contractors demobilized and the in-service date of TMEP would be delayed."
Not sure if they had a plan. The pipeline has reached the more urban areas and that means more expense. Plus the legal fees, police costs, security all add up. The existing line is getting old and they need the new line in. Once operational, they need to rebuild the old line.