(Bloomberg) -- TC Energy Corp. is nearing a deal to sell a stake in a natural gas pipeline system to Indigenous communities in Western Canada, with help from Alberta’s government.
A provincial government agency has given “contingent approval” on a $1 billion loan guarantee to allow the Indigenous consortium to finance the deal, according to a letter from TC Energy seen by Bloomberg News. Dozens of Indigenous communities in Alberta, British Columbia and Saskatchewan — Canada’s three westernmost provinces — are part of the buying group.
Calgary-based TC Energy plans to announce the transaction on July 30, the letter said, with closing set for late August. It cautioned that there are legal, financial and regulatory matters still to be finalized.
TC Energy’s NGTL System gathers and transports natural gas in Canada’s western provinces for domestic and export markets. The network is 24,386 kilometres (15,153 miles) in length and runs between Alberta and British Columbia.
The transaction is another move in TC Energy’s campaign to sell assets and reduce debt after suffering enormous cost overruns on the Coastal GasLink pipeline project, which it built to supply Canada’s first major liquefied natural gas plant. Last year, the company exceeded its $5 billion divestiture target through the sale of a 40 per cent equity interest in the Columbia Gas Transmission and Columbia Gulf Transmission networks in the U.S.
In June, TC Energy said it was working on plans to divest another $3 billion of assets in the near future.
“We want to create mutually beneficial partnerships with Indigenous communities. Potential ownership in our projects and assets means that Indigenous communities can share in Canada’s resource economy,” a spokesperson for TC Energy said by email, while declining to confirm the NGTL deal. A spokesperson for the government agency involved in the transaction, Alberta Indigenous Opportunities Corp., declined to comment.
The company last year sought approval from the Canada Energy Regulator to transfer ownership of the NGTL system from one corporate entity to another to “facilitate potential future minority ownership of the system, including possible participation from Indigenous groups.”
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