Alberta government authorizes up to $2.9B for Edmonton-area refinery operations, financing

CBC
·2 min read
The Alberta government has authorized the Alberta Petroleum Marketing Commission to borrow up to $2.9 billion toward the financing and operations of the North West Redwater Sturgeon refinery. (CBC - image credit)
The Alberta government has authorized the Alberta Petroleum Marketing Commission to borrow up to $2.9 billion toward the financing and operations of the North West Redwater Sturgeon refinery. (CBC - image credit)

The Alberta government has authorized the Alberta Petroleum Marketing Commission to borrow up to $2.9 billion toward the financing and operations of the North West Redwater Sturgeon refinery, north of Edmonton.

The treasury board and energy, minerals, and finance ministries have stepped in once again to support the troubled refinery project, which was announced in an order in council on Dec. 7.

Richard Masson, the former CEO of APMC and a current executive fellow with the University of Calgary School of Public Policy, said the government needs to offer greater detail on the nature of borrowing authorization.

"The government should be explaining what this new borrowing authorization is for, how much is new, and how much is refinancing and what their outlook is," Masson said in an interview.

The APMC is responsible for supplying 75 per cent of the feedstock for the refinery, which processes raw bitumen into diesel and other products.

READ | Order in council: Petroleum Marketing Act / Financial Administration Act

"The increase in the province's borrowing and lending requirements on behalf of APMC do not represent an increase in the government's operating budget, as it only gives the authority to lend to APMC to meet its contractual obligations," a statement attributed to the Minister of Energy and Minerals Brian Jean said.

APMC continues to be a 75 per cent toll payer and requires the ability to draw on additional lending if needed for future contractual obligations, including capital expenditures, operating costs, financing obligations and maintenance, the statement said.

"If APMC draws on the increased borrowing capacity, it will be used to fulfil contractual obligations, as well as support refinery operations to get Alberta petroleum products to market and continued emissions sequestering," it reads.

The cost of building the refinery was estimated at $5.7 billion when construction started in 2013 and ended up at $10.1 billion in 2020.

In 2020, the provincial government bought a 50 per cent equity stake in the refinery following multi-billion cost overruns and missed deadlines.

The commission entered a lending and borrowing agreement with the government in 2014. A previous order in council allowed the commission to borrow up to $1.8 billion for the refinery, according to the commission's 2022-23 annual report.

READ | Alberta Petroleum Marketing Commission annual report 2022 - 23