Indigenous investors look to federal loan program

Will Ottawa's anticipated Indigenous loan program include the oil and gas sector? 


There’s concern from some First Nations leaders about the federal government’s coming Indigenous Loan Guarantee program.

The Indian Act bars Nations from using their land as collateral for loans, meaning they must look for commercial equity loans at higher interest rates. And many Nations don't have the credit history necessary.

So Ottawa has announced that a special Indigenous loan-guarantee program will be part of the 2024-245 federal budget, which will be presented to Parliament on Tuesday April 16.

But some Indigenous leaders are asking if it will allow Indigenous Peoples to decide for themselves what resource industries to invest in. Or will it ban or restrict investment in oil and gas projects, in the name of Ottawa’s net-zero climate plans and its promised cap on oil-and-gas emissions?

Such a program should be inclusive of all industries such as mining and oil and gas,” says the Indigenous Resource Network (IRN).“Self-determination means Indigenous communities should decide what industry to invest in.”

The IRN was among Indigenous groups that have told Prime Minister Trudeau that barring oil and gas projects from the loan-guarantee plan would “exclude Indigenous peoples from stable, prosperity-delivering investments — in some cases, their only local opportunities.”

“This program cannot be driven by an ‘Ottawa-knows-best’ policy approach — the judgment of Indigenous Nations about projects to pursue must be respected,” said a letter signed by groups including the IRN, the First Nations Power Authority, the First Nations LNG Alliance and Asokan Generational Developments.

There has been no answer yet from Ottawa.

The details of the program will be of major interest to a number of Indigenous groups eyeing investment in the expanded Trans Mountain oil pipeline. Such Indigenous participation is being pursued by the pipeline owner — the federal government. 

And of interest to a group of First Nations in BC that have an option to take a 10% interest in the Coast GasLink pipeline that will feed the LNG Canada plant at Kitimat BC, and the Haisla Nation’s planned Cedar LNG plant in that region. 

Whatever the loan program looks like, Indigenous Peoples in Canada have been increasingly investing in all kinds of natural-resource projects, to develop oil and gas, mining, forestry, and projects from seafood to solar. 

The prime example is that of a 2022 deal in which Enbridge announced that 23 First Nation and Métis communities were taking an 11.57% interest in seven Enbridge-operated pipelines in northern Alberta — for $1.12 billion.

That investment, by the way, was powered by $1 billion in loan guarantees from the Alberta Indigenous Opportunities Corporation. 

Alberta, BC, Saskatchewan and Ontario have been far ahead of Ottawa in providing Indigenous loan guarantees. And they do allow for investment in the oil and gas sector.

Among those Alberta pipeline partners is the Willow Lake Métis Nation. It has also partnered with Suncor and seven other Indigenous communities to become part owners of an oilsands pipeline.

Another partner is the Fort McKay First Nation. In addition, it and the Mikisew Cree First Nation have held since 2017 a 49% equity position in Suncor’s East Tank Farm Development, part of the Fort Hills oil sands project in Alberta.

That was a $503-million deal that was, at the time, the largest business investment by First Nations in Canada. 

The 800-member Fort McKay Nation has long been involved in the oilsands, and has interests and joint ventures in the pipeline and forestry sectors. Last month, the nation and Suncor Energy Inc. signed an agreement that could lead to Suncor’s first  extraction project on reserve lands.

The Fort McKay Nation has earned billions from natural resources, and the the 2016 census showed it was one of the wealthiest First Nations communities in Canada with an annual average income of $78,916, well above the provincial average of $62,778.

The Macdonald-Laurier Institute has noted that “from a near standing start 40 years ago, literally hundreds of service and supply companies are now owned and operated by First Nations, Métis, and Inuit peoples.”

There have been Indigenous investments and partnerships in resource projects across the country, and others are in the works.

In northern BC, for example, the McLeod Lake Indian has signed an agreement, in partnership with the province, to work on what Premier David Eby calls an "elegant" proposal for a clean energy hub on band territory north of Prince George. The $7-billion project would include a hydrogen plant. 

And now there are examples of Indigenous groups becoming early partners in nuclear ventures. 

Some Indigenous Peoples have large petroleum and pipeline projects in mind for investment. For example, as the Trans Mountain oil pipeline expansion goes into service on May 1, a number of First Nations groups have been looking into investment in the system.

The federal government has promised these groups an opportunity to buy into the expansion project, through some kind of ‘special vehicle,’ and has spoken of financial support so "they don't have to risk any of their own money to participate."

If that 'special vehicle' is the feds’ Indigenous Loan Guarantee program, we should know more on Tuesday, and know whether Ottawa has been listening on the issue of oil and gas investment.

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