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Workers lay pipe during construction of the Trans Mountain pipeline expansion on farmland, in Abbotsford, B.C., on May 3.DARRYL DYCK/The Canadian Press

The federal government’s plan to sell at least part of the Trans Mountain Expansion Project to Indigenous owners has entered a new stage, with Ottawa indicating it’s prepared to provide financial backing to First Nations and Métis communities to help them acquire ownership stakes in the pipeline, and one group that had been pursuing a stake leaving the field.

In a recent letter to Indigenous groups, Finance Minister Chrystia Freeland said Ottawa would support Indigenous communities with access to capital, meaning communities would not need to risk or use any of their own money to participate. The letter also states that taking part in the federal government’s sales process would not prevent Indigenous communities or Indigenous-led proponents from participating in a commercial divestment process to acquire additional equity in Trans Mountain.

The letter, dated Aug. 2, was not publicly released by the government but a copy was reviewed by The Globe and Mail, and previously reported by Bloomberg.

Since the federal government bought the pipeline in 2018, several groups have emerged as potential Indigenous ownership ventures, including Calgary-based Project Reconciliation, Nesika Services and Chinook Pathways, a partnership between Western Indigenous Pipeline Group (WIPG) and Pembina Pipeline Corp.

Project Reconciliation managing director Stephen Mason said his group remains focused on acquiring a stake in the project, despite cost overruns that have pushed the estimated total cost to $30.9-billion.

“We are ready to get into a formal process on the remaining percentage, whatever that might be, when the government is ready to have that conversation,” Mr. Mason said.

“So, put it this way: We are not going away.”

Project Reconciliation has pushed the idea of up to 100 per cent Indigenous ownership of the pipeline, saying the project has the potential to generate long-term, steady returns that would allow Indigenous groups to invest in other projects, including renewable energy projects.

In an e-mail, Paul Poscente, who had been Nesika’s Calgary-based executive director, said Nesika, which had been pursuing a stake, was no longer active. But he did not provide any details.

When Nesika was launched in January, 2022, it was described as a grassroots, community-led not-for-profit that would help communities make informed decisions about ownership opportunities in the expansion project (TMX).

A WIPG representative was not immediately available to comment. But in an e-mail, Pembina spokeswoman Jennifer Findlay said Pembina welcomes the recent federal move and remains engaged with WIPG.

“The Government of Canada’s reinitiation of engagement with Indigenous communities, an important step towards honouring their commitments for unlimited Indigenous equity participation in Trans Mountain, is a positive signal that divestment planning is progressing,” Ms. Findlay said.

“Pembina is committed to evaluating the opportunity ahead with our partner WIPG.”

Ms. Freeland’s letter set out three key principles for how Canada plans to ensure that Indigenous groups along the pipeline corridor and marine shipping route have an opportunity to acquire an ownership stake: Canada will support Indigenous communities with access to capital, meaning those communities will not need to risk or use any of their own money to participate; an ownership position would come through an equity interest collectively held in a special purpose vehicle; and the equity interest would result in cash flows to participating communities through that special purpose vehicle.

Ottawa first announced its intention to explore the possibility of Indigenous economic participation in TMX in March, 2019. “The letter sent this month represents the next step in the federal government’s commitment that Indigenous communities share in the economic benefits derived from Trans Mountain,” Katherine Cuplinskas, Ms. Friedland’s spokesperson, said in an e-mail.

The project remains extremely controversial, with critics pointing to cost overruns and environmental impacts.

In a recent letter to the Canada Energy Regulator, which is reviewing an interim toll application from Trans Mountain Corp. for the expansion project, Tsleil-Waututh Nation – which has long opposed TMX – said proposed tolls would cover less than half of the current cost estimate, compromising Trans Mountain’s ability to continue as a going concern and to pay for adequate maintenance.

Trans Mountain filed its interim tolls application on June 1, with a request for approval by Sept. 14. On Aug. 1, the regulator turned down that request, saying in a notice that a “more robust” hearing process was required.

Trans Mountain in an e-mail called that “standard practice,” and said the regulator acknowledged the need to avoid delays. A preliminary decision on interim tolls is expected this fall, with a hearing process to consider broader issues to be set at a later date, Trans Mountain said.

The company has said it expects the expansion project to be in service in early 2024.

Federally-owned Trans Mountain operates an existing oil pipeline between Alberta and British Columbia. TMX would roughly triple the capacity of the existing pipeline and is meant to give Canadian oil producers access to global energy markets.

The federal government bought the existing pipeline and took over the expansion project for a total of $4.5-billion in 2018 after then owner Kinder Morgan Inc., based in Houston, threatened to scrap the project because of court challenges and opposition from environmental groups.

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