Construction work on the Trans Mountain pipeline outside Valemount, B.C. in September 2020. Photo by Adma Jones / Flickr (CC BY 2.0) Matteo Cimellaro, Local Journalism Initiative Reporter

Canada’s six biggest banks have increased financing for the Trans Mountain pipeline expansion (TMX) by $3 billion to help cover the project’s soaring cost overruns.

TD, RBC, CIBC, BMO, the National Bank of Canada and Scotiabank are listed as lenders for the new financing, according to information environmental non-profit sourced from a Bloomberg Terminal on May 15.

“This is information that should really have been published by Finance Canada because [Trans Mountain] is a Crown corporation, or by the Canadian banks if they were actually proud of this financing,” Richard Brooks,’s climate finance director, told Canada’s National Observer in a phone interview on May 16. 

“They clearly are not because they want to bury it as deep as the pipeline is getting buried.”

Notably, only Canadian banks are stepping up to finance TMX, whose construction costs cracked the $30-billion threshold earlier this year, said Brooks. “I think that speaks a lot about how financial institutions around the world view the tarsands and projects related to it.”

The pipeline expansion has faced staunch opposition from environmentalists and some Indigenous communities, seen insurers drop like flies in recent years and experienced lengthy construction delays as well as ongoing cost increases from the original $5.4-billion estimate. 

RBC declined to comment on the new financing. The other five banks did not respond to requests for comment by publication time.

Finance Canada also did not respond to a request for comment by deadline. The department has a well-documented history of not answering basic questions related to Trans Mountain’s finances, including a $10-billion taxpayer-backed loan guarantee the federal government approved last year. Finance Canada regularly cites financial reports produced by TD Securities and BMO Capital Markets as proof that TMX is still commercially viable despite ballooning construction costs but won’t share the details with the public. Those reports are based on the assumption the pipeline will operate for 100 years, which the Parliamentary Budget Officer has deemed unrealistic, Canada’s National Observer uncovered last June.

From 2024 to 2043, Trans Mountain is expected to contribute $2.8 billion to federal, provincial and local governments through taxes, according to an Ernst & Young report dated March 2023 and commissioned by Trans Mountain. This report also claims TMX will contribute $26.3 billion in GDP from 2018 to 2023, which is less than its estimated $30.9-billion construction cost. 

Although the information published by reveals which banks are involved in the $3 billion in new financing, the Bloomberg Terminal doesn’t reveal how much each individual bank has contributed. It was the same story last year, and it is still unclear which banks are contributing the most.

When Finance Canada was pressed for details about the $10-billion loan guarantee last year by environmental groups and media, the response was crickets. The fact that “nobody wanted to talk about this loan” speaks volumes about this “national embarrassment” of a project, said Brooks. “It doesn’t look good for our Canadian banks to be the only banks in the world that are willing to fund this project.”

Last year, RBC was the world’s largest funder of fossil fuel projects, with US$42.1 billion in financing to coal, oil and gas companies. RBC, Scotiabank, TD, BMO and CIBC have funnelled about $1.1 trillion to fossil fuel companies since the Paris Agreement was signed seven years ago. Last year, they provided more than 90 per cent of the funding received by oilsands companies. At the same time, foreign banks are divesting from the oilsands. 

Canada’s federal government has set a target to reduce greenhouse gas emissions 40 to 45 per cent below 2005 levels by the end of the decade. In order to achieve this, private banks, including those propping up TMX, need to align their financing with Canada’s climate goals, said Brooks. As wildfires rage in Alberta and Saskatchewan, these banks could have withheld further financing to show they can take action on climate, but “unfortunately that was not the case,” he added.

Trans Mountain’s finances are murky at best and deliberately opaque at worst, according to an analysis published last October by West Coast Environmental Law. Thanks to strategies such as withholding information from the public and using a confusing corporate structure and certain accounting structures, it found, there is still a lot about TMX that the public does not know.

Brooks says Canadians need to know what’s going to happen when the project announces further cost overruns and how the government will deal with it.

“What happens if it leaks? What’s the debt burden on Canadians when this project gets offloaded?” he asked. “Right now, the running total cost is over $30 billion. And even the company itself says that they doubt that the government will be able to recoup the costs upon sale of the project, which is the long-term intention of the government.”

Because TMX is owned by a Crown corporation, it is “in essence our money that is being put into this project, both through government funding and also backstopping or guaranteeing these loans that are being issued by private banks to Trans Mountain company,” said Brooks.

The aforementioned West Coast Environmental Law analysis estimates taxpayers will eat $17 billion of the project’s debt. That analysis was published before the $30.9-billion construction estimate in March and the brand-new revelation that financial institutions are bankrolling another $3 billion. While Finance Minister Chrystia Freeland has not broken a promise that no more public dollars will flow to TMX, which she made shortly before the $10-billion loan guarantee came to light, there is no doubt the guarantee puts taxpayer dollars at risk. 

Finance Canada did not confirm whether it will also be guaranteeing the additional $3 billion uncovered by 

Bankers are supposed to be good with figures and numbers, yet it’s “so very clear that there’s no good financial case for this,” said Brooks. 

“This is an artificially propped-up project that has really been more about getting votes and appeasing oil and gas companies than it has anything to do with what’s in the public’s interest.”

Trans Mountain will have to repay the banks, with interest, and experts warn it is unlikely the company will be able to repay banks based on the project’s construction costs, tolls and international oil markets.

Originally, interest on the $10-billion loan was only 1.85 per cent — far below the prime interest rate. Canada Development Investment Corporation’s annual 2022 report indicates the new revolving credit facility bears interest “at the Canadian Prime rate.” Essentially, the $10-billion loan was amended, extended, increased to $13 billion and is now at the prime interest rate, explained Eugene Kung, a staff lawyer at West Coast Environmental Law.

Trans Mountain says TMX will be completed by the end of the year and begin operating in 2024.

By Matteo Cimellaro, Local Journalism Initiative Reporter

Original Published on May 17, 2023 at 13:21

This item reprinted with permission from   Canada's National Observer   Ottawa, Ontario
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