CALL IT RECONCILIATION THROUGH ECONOMIC DEVELOPMENT: OTTAWA MAY OPT TO SELL PART OF ITS INTEREST IN THE TRANS MOUNTAIN PIPELINE EXPANSION TO INDIGENOUS-LED GROUPS.
Reconciliation by biz development a tantalizing prospect
In his book Enlightenment Now, cognitive scientist Steven Pinker argues that the prevailing culture of pessimism has made the very notion of progress unfashionable.
The release this week of the final report of the National Inquiry into Murdered and Missing Indigenous Women and Girls lends to the impression that we have never had it so bleak when it comes to Canada’s relationship to its First Peoples.
Yet there is plenty of evidence to contradict the stereotype that all Indigenous Canadians are trapped in a cycle of misery.
Take the Trans Mountain pipeline expansion. The Liberal government will decide next week whether to approve the project, having been forced to re-examine the environmental review and Indigenous consultation process by the Federal Court of Appeal.
The government will make its decision at a cabinet meeting on June 18, after receiving the findings of an extended consultation exercise.
If the project gets the green light, it looks increasingly likely that the government will invite bids from the private sector to buy the pipeline.
A sale before the next election would not just get the federal government out of a pipeline business it never wished to be in, it would also raise billions of dollars that could be put toward pet projects such as a green technology or Indigenous business fund.
Finance Minister Bill Morneau has made no secret of the fact that Indigenous participation in Trans Mountain through an equity stake or revenue-sharing would be a welcome development.
As such, credible Indigenous-led groups have emerged to purchase
significant interests in the project.
The most developed is called Project Reconciliation, which proposes to buy a 51-per-cent stake in TMX. The group has invited Indigenous communities in British Columbia, Alberta and Saskatchewan to participate as shareholders, with the goal of creating a sovereign wealth fund.
Delbert Wapass, a former chief of the Thunderchild First Nation in Saskatchewan, is the executive chairman of the group and was in Ottawa this week meeting Liberal MPs. He said the MMIW report was correct in claiming a “genocide” of Indigenous peoples has taken place.
“But what is helping that situation to occur? Poverty within our communities. We need to change that narrative,” he said. “This is an opportunity and I don’t want it squandered. At the end of the day, this is reconciliation through economic development.”
He said he recognizes the environmental concerns of some First Nations along the right-of-way and on the B.C. coast but contended that an Indigenous-led project would provide an opportunity to protect land, water, animals and fish.
“This would put First Nations in the driving seat to dictate and develop environmental law and marine safety, to look after the salmon, the waters and so on,” he said.
Project Reconciliation is not yet ready to reveal its level of support among First Nations, or its financial backers, but Wapass is confident his group will be able to raise the projected $7.6 billion necessary to buy a majority stake in the existing pipeline ($2.3 billion) and fund half of the expansion (another $4.6 billion). The group’s financial summary anticipates a syndicated bond issue underpinned by 20-year shipping agreements with oil producers that would not require First Nations to invest cash up front.
After costs and expenses, the group projects annual profits of $250 million, of which 20 per cent would be distributed to shareholders and 80 per cent injected into a sovereign wealth fund.
There is obviously the prospect for many a slip between cup and lip, but two things can be said with confidence — one, that no one is going to get this pipeline built without a significant Indigenous ownership stake; and, two, once built, pipelines have very high rates of return.
Project Reconciliation is not the only Indigenous player on the block. A group of Alberta First Nations and Métis communities unveiled a rival bid on Wednesday. Iron Coalition, co-led by Chief Tony Alexis of the Alexis Nakota Sioux Nation, is urging all First Nations and Métis communities in Alberta to sign an exclusivity agreement to join its bid to secure ownership of the pipeline.
The structure of the Iron Coalition proposal is less clear but if it mirrors Project Reconciliation, it is no wonder there is growing excitement among First Nations and inside government — Indigenous communities would become partners without being exposed to financial risk, and the federal government, for its part, would not be required to invest more public funds.
Ideally from the government’s point of view, a private-sector bidder would come forward to take the other 49 per cent ownership stake.
“We want the thing off the books,” said one government official.
Whether the sale process can be concluded before the election remains a subject of some debate inside government.
There also remains the question of price. Politically, the Trudeau government can’t sell the pipeline at a loss.
But this week’s court decision in Minnesota that could delay Enbridge Inc.’s replacement of its Line 3 pipeline between Alberta and Wisconsin only increases the pressure on the government to get on with TMX. “We’ve always known we were going to hit a real pinchpoint for pipeline capacity around 2020. We have to have a release valve, be it Keystone, Line 3 or TMX,” said the government official.
The bottom line is that the federal government is a very motivated seller and there are only a limited number of potential buyers with sufficient credibility among First Nations.
It’s an important opportunity for all Canadians and one about which we should be constructively optimistic.
The sale of TMX has the potential, if handled properly, to generate long-term revenues for a large number of Indigenous communities and eventually lead to economic independence. What progress that would be.