Union of BC Indian Chiefs concerned about Indigenous investment in TMX Pipeline
April 5, 2022 | By Jacob Cardinal
(ANNews) – On March 15, 2022 the Union of BC Indian Chiefs released an open letter for Indigenous leadership interested in buying the Trans Mountain Pipeline Expansion (TMX) project.
“We are concerned that the government is using TMX as another divide and conquer project and is not providing a full and accurate account of the financial future of the project,” wrote the Chiefs.
” 1/8First Nations’ 3/8 due diligence must include an assessment of the commercial viability of TMX under its unique toll structure, and also include an analysis of future liability related to maintenance and spills.
“Otherwise TMX could be modern-day economic version of a small-pox blanket.”
“UBCIC supports Indigenous self-determination and economic self-sufficiency. However, this cannot come at any cost nor in a way that undermines other Nations’ title and sovereignty,” said the UBCIC.
The TMX project’s current situation is quite bleak, they note, as Trans Mountain Corp. has been hit with huge losses.
The initial construction cost of TMX has increased dramatically over the years due to delays, mismanagement and cost overruns. These include major setbacks resulting from climate-related events such as the forest fires, floods and landslides that hit BC in 2021.
The original cost for TMX in Kinder Morgan’s 2013 application was $5.4 billion. That cost increased to $6.8 billion in 2015; $7.4 billion in 2017; $9.3 billion in 2018; and $12.6 billion in 2020.
The 2022 cost estimate of $21.4 billion is 4 times the original cost, and more than double the cost when Canada bailed out the project from Kinder Morgan in 2018.
15 global insurers have stated they will not insure Trans Mountain, leaving the operators with $2 billion in liability for the two pipelines, and could face unlimited liability in a spill.
Additionally, the Trans Mountain Corp. delayed the estimated completion date for the project from this year to the third quarter of 2023.
The company also confirmed that due to agreements with shippers, only 20 to 25 per cent of the capitol costs can be charged through tolls, the fees charged to the oil producers who ship their product through the pipeline.
This means that Trans. Mountain Corp would be left to absorb a $7 billion price tag, putting projected returns for the project into serious doubt.
“Because of this massive cost increase – 4 times the original cost estimate – any illusion of the commercial viability of TMX has collapsed and the pipeline is destined to become a stranded asset,” said the letter.
However Indigenous organizations such as Nesika Services and Project Reconciliation are still willing to purchase the pipeline.
“It means obviously the entire pie for the project is smaller,” said Nesika Services executive director Paul Poscente, in an interview with CTV. “But we’ve done some modelling based on the publicly available information, and it’s absolutely still viable.”
“We still believe that Canada can sell a portion of this pipeline to Indigenous communities on a commercial basis,” Poscente said. “We have been urging Canada to start a negotiation.”
Jacob Cardinal, Local Journalism Initiative Reporter, ALBERTA NATIVE NEWS