Opinion: Don’t exclude oil and gas from Indigenous loan guarantees – Financial Post

Sep 28, 2023

First Nations should get to decide what kinds of projects they invest in, not politicians or bureaucrats in Ottawa

In the past 11 years, Indigenous nations have obtained more than $10 billion in equity in major resource projects across Canada. The bulk of these projects have been in utility assets, but about 40 per cent by value have been in oil and gas. Loan guarantees for Indigenous nations are a very useful policy instrument that allows them to become part owners of projects on their territories. As Ottawa considers expanding their use, it needs to allow Indigenous communities to decide for themselves what kind of assets they want to own.

Most projects that have attracted Indigenous equity to date have involved long-term contracts and purchasing agreements, transmission lines, hydro power and other renewable energy, as well as pipelines and LNG terminals. This reduces financial risk for the Indigenous communities involved, as the cost of repaying the debt is structured to be less than the project’s earnings. They also provide predictable revenues that allow Indigenous governments to make long-term financial decisions independent of government transfers, while building an asset base they can use as collateral in future.

Many of these deals have only been possible because of loan guarantees from provincial governments. There is nothing new or radical in the concept of governments providing loan guarantees for things deemed to be in the public interest; it is the central premise of development and infrastructure banks around the world. In Canada, government-backed loans are used for programs as diverse as housing, farm ownership, public transportation, energy infrastructure and student loans.

Read More: https://financialpost.com/opinion/opinion-dont-exclude-oil-and-gas-from-indigenous-loan-guarantees