Enbridge sweetens First Nations equity offer

The equity package for First Nations unveiled by Enbridge this month is not a new proposal.

Malcolm Baxter

The equity package for First Nations unveiled by Enbridge this month is not a new proposal.

Rather, says Northern Gateway president John Carruthers, it is a refinement of the 10 per cent equity buy-in that was on offer to First Nations from the beginning.

He said First Nations had two problems with the original proposal: they didn’t have the money to buy into the project and they didn’t have the capability to take on the risk during the construction phase.

Carruthers said Enbridge has responded by offering financing “at favourable terms” – Enbridge will, in effect, be lending the money to First Nations – and having First Nations ownership not kick in until construction is complete and the pipeline operational.

And because the First Nations would be buying in when the pipeline is up and running, they would have money coming in almost immediately.

“It will generate cash flow and that’s the cash flow that relates to their 10 per cent ownership,” said Carruthers.

The loans would be repaid over 30 years with payments deducted from the income generated by their equity.

If the project comes in at the estimated $5.5 billion cost, then equity would be $550 million.

Carruthers said the net benefit of the equity position over the 30 years is estimated at $280 million.

Noting Enbridge had always been committed to providing “significant” long-term opportunities for First Nations, he added, “We’d always thought equity would be good because it would align our long-term interests together. That’s the way they could best see benefits from the project.”

As for reaction from First Nations along the pipeline route, he said Northern Gateway had met with about two-thirds of the communities so far.

“I think I would characterise the response as of interest to them.” However, “They would still have to look at the equity proposal and make their own assessments.”

Asked if the responses to date were different on each side of the Rockies, Carruthers said generally the First Nations in Alberta had more experience with oil and gas companies.

“So there’s still a bit of an education process we need to go through in BC.” And the lack of treaties here added another level of complication.

Overall, he said, “We have been engaged with some very significantly and others to a lesser extent.”

When the Sentinel pointed out the Haisla appeared to be implacably opposed to the project, Carruthers – without naming any particular one – conceded, “From coastal First Nations we’ve generally seen more opposition to the project.

However, he was still hopeful Northern Gateway and the First Nations could get into a dialogue both about “the extensive measures we are going to take to ensure their concerns about a potential spill (and) what we think of as very significant benefits that would be available to aboriginal communities.”

As for the project overall, Carruthers described it as of “vital strategic importance to Canada. It’s a real game changer.”