TC Energy’s $5B asset sale another opportunity for Indigenous communities
• The announcement this week that TC Energy Corp. plans to sell $5 billion in assets next year has prompted speculation that Indigenous communities could scoop up ownership stakes in some portion of the company’s Alberta pipeline assets — a reflection of the growing shift in the sector’s approach to equity ownership in major projects.
The Calgary-based company said Wednesday it intends to sell individual assets or minority stakes in unspecified assets totalling $5 billion through 2023 as the pipeline giant seeks to de-leverage and free up capital to fund future growth opportunities.
It’s not yet known which assets the company would prioritize for sale, but prior to this week’s announcement, some analysts had speculated the company could be inclined to sell off its 50-per-cent stake in the 460-kilometre Grand Rapids pipeline connecting the oilsands to terminals in the Edmonton/heartland region, as well as the smaller 72-kilometre White Spruce pipeline which feeds into Grand Rapids.
Last year, TC Energy sold its 15-per-cent stake in the Northern Courier Pipeline project to a partnership between Indigenous communities and Suncor Energy Inc. More recently, the company struck a deal with more than a dozen Indigenous communities along the route of its Coastal Gaslink pipeline project for an option agreement that could see the communities collectively acquire a 10-per-cent stake in the $11.2-billion pipeline.
“There’s been a lot of rumours about a potential package of assets that TC might put on the street for a long time,” said Paul Poscente, chief executive for Axxcelus Capital Advisory, a Calgary-based firm which specializes in structuring and financing Indigenous ownership in major projects.
“I am very encouraged by the conversations that we’ve had previously about TC’S desire to think about and engage on Indigenous ownership in major assets. So we fully anticipate a portion of these assets ending up in the hands of Indigenous communities, in some form or fashion.”
TC Energy has not confirmed which assets could potentially be placed on the block as part of the asset sale, but CEO François Poirier said in a statement that the company seeks to create “mutually beneficial partnerships” with Indigenous communities as it has done in the past with the equity ownership arrangement struck on Coastal Gaslink. Poirier also suggested that governments can facilitate these types of arrangements by assisting in providing access to capital for Indigenous communities.
“Ownership in our projects and assets means that Indigenous communities can share in Canada’s resource economy where we have the opportunity to learn, grow and change the way energy is developed in Canada,” he said. “We hope that governments will stand behind this vision by providing equity financing and loan guarantees so that we can work together to advance reconciliation with Indigenous communities.”
There is growing precedent in the Canadian resource sector of Indigenous communities taking ownership equity in major projects.
Enbridge Inc. announced last month it had reached an agreement with 23 First Nation and Métis communities for an 11.57-per-cent stake in seven pipelines in the Athabasca region of northern Alberta for $1.12 billion — one of largest deals of its kind in North America to date.
Firms that specialize in advising Indigenous communities on such partnerships or in assembling the deals themselves say they reflect a broader evolution in how the industry is relating to Indigenous communities, one that began with employment opportunities for Indigenous people and has since evolved to negotiating impact benefit agreements, procurement contracts, and, finally, co-ownership.
“Now, we see co-ownership as kind of the foundational and best platform for aligning impacted stakeholders for future success,” Poscente said.
A significant impediment to communities gaining ownership of projects, however, is a lack of access to capital. Currently, a patchwork of organizations exist across Canada dedicated to helping Indigenous groups invest in projects.
The Alberta Indigenous Opportunities Corp., a provincial Crown corporation set up in 2019, provided the $250-million loan guarantee that facilitated the Enbridge deal announced last month — but many Indigenous leaders say a dedicated federal loan guarantee program is needed.
In the 2022 federal budget, Ottawa signalled it would provide $103.4 million for the development of a national benefit-sharing framework to assist Indigenous communities in partnerships on resource projects.
Leaders like Niilo Edwards, CEO of the First Nations Major Projects Coalition, also say the green energy transition, which is expected to require billions in investment in Canadian infrastructure, will require more companies to meaningfully contend with Indigenous participation.
“The road to net-zero runs through Indigenous lands,” Edwards said. “The only way that we are going to achieve our goals is through creating the environment where Indigenous communities can be successful, making informed decisions on their participation, and getting access to the financing that they need in order to participate as partners.”