Steel pipe to be used in the oil pipeline construction of the Canadian government’s Trans Mountain Expansion Project lies at a stockpile site in Kamloops, B.C., on June 18, 2019.Dennis Owen/Reuters
The federal government says no more public funds will be spent on the Trans Mountain pipeline expansion, after the Crown corporation building the project announced Friday that the cost has ballooned to $21.4-billion and the expansion now won’t be complete until late 2023.
That’s close to a 70-per-cent jump over the initial $12.6-billion price tag, and almost a year later than the original December, 2022, start date targeted by Trans Mountain Corp.
Finance Minister Chrystia Freeland told media Friday that instead of public cash, Trans Mountain will secure the funding necessary to complete the project with third-party financing, either in public debt markets or from financial institutions.
Ms. Freeland said financial advice from BMO Capital Markets and TD Securities confirmed that “public financing for the project is a feasible option that can be implemented promptly.” And despite the increased cost estimate and longer completion timeline, she said the project remains commercially viable.
Trans Mountain referred questions about how it will secure financing to Ms. Freeland’s office. Her office provided no details on how confident the minister is that the project will be able to nail down funds, but said prospective purchasers still have a strong interest in operational infrastructure assets such as the pipeline expansion.
Financial institutions are growing increasingly wary of financing oil projects, as they face pressure to put more emphasis on environmental, social and governance (ESG) measures and make greener investment decisions.
Less than a year ago, Trans Mountain successfully lobbied the federal energy regulator to let it keep the name of its insurer secret, arguing that public pressure on insurance companies over environmental concerns in the oil sector has already made it harder and more expensive to insure the pipeline expansion.
The expansion’s financing costs alone have already increased by about $1.7-billion, Trans Mountain said Friday. The corporation attributed that to higher construction costs, the extended end date and interest payments.
Trans Mountain said another $2.3-billion of the cost jump comes from what it called “project enhancements,” such as more benefit agreements with Indigenous communities, the installation of advanced leak detection systems and new, unplanned route changes that avoid culturally and environmentally sensitive areas.
Wildfires, extreme heat, flooding and landslides that pummelled British Columbia in 2021 and COVID-19 measures added $1.7-billion to the price tag, while schedule pressures such as securing permits and the “significant construction challenges in both marine and difficult terrain” that have pushed the completion date into late 2023 account for another $2.6-billion.
The expansion project will nearly triple the capacity of the existing pipeline, which runs from Strathcona County, near Edmonton, to Burnaby, B.C. The vast majority of the project, which is about half complete, uses the existing pipeline route.
Prime Minister Justin Trudeau’s government bought the pipeline and expansion project from Kinder Morgan Inc. for $4.5-billion in 2018 amid legal hurdles and opposition from Indigenous communities, environmentalists and the B.C. government. The Federal Court of Appeal overturned the pipeline project’s approval, ruling Ottawa had failed to adequately consult First Nations. That led to a new round of consultations, and the federal cabinet approved the expansion for the second time in 2019.
However, the federal government has never intended to be the final owner-operator of the expanded pipeline, and Ms. Freeland reiterated that position Friday.
While buying the pipeline and the expansion was “a serious and necessary investment” to ensure Canada receives fair market value for its oil and gas, she said, Ottawa intends to launch a divestment process in the coming months.
“Our government has also been working with Indigenous communities on further economic participation in Trans Mountain for more than two years, and we will announce the next step towards that important objective later this year,” she said.
Eugene Kung of West Coast Environmental Law, an environmental law and public advocacy group, said in a statement Friday that the skyrocketing cost of the expansion and the delay demonstrate that Trans Mountain’s “already-collapsed business case is worse than ever, and the cost will probably increase further.”
“It is outrageous that [the Trans Mountain expansion’s] cost has nearly doubled in two years with very little oversight. Especially since the so-called economic benefits were used to justify the infringement of Indigenous rights, the significant climate impacts of building oil and gas expansion infrastructure, and the devastating effects on wildlife like salmons and orcas,” he said.
“It’s time to admit that [the project] is a bad idea and to cut our losses by cancelling this white elephant before it becomes a stranded asset.”
Oil companies, however, remain supportive of the pipeline expansion.
Cenovus Energy Inc. president and CEO Alex Pourbaix said he believes the business case for the project remains sound, and looks forward to it coming online.
“While no one wants to see cost increases, they are often a fact of life with projects of this size, and in this case were largely beyond Trans Mountain’s control,” he said in an e-mail.
“Getting this pipeline built will provide a significant boost to the Canadian economy while helping to solidify investor confidence in our oil and gas industry.”
Suncor Energy Inc. president and CEO Mark Little said in an e-mail that while he was disappointed with Friday’s news, the pipeline remains “vital to Canada’s long-term economic success and energy security.”
Trans Mountain president and CEO Ian Anderson will retire April 1. On Friday, he said progress on the pipeline expansion over the past two years has been “remarkable when you consider the unforeseen challenges we have faced including the global pandemic, wildfires and flooding.”
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MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
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