As we have commented on in previous bulletins, 1 Indigenous equity participation in energy and infrastructure projects in Canada is expected to increase. Government-backed loan or loan guarantee programs specifically targeting Indigenous equity participation have supported a number of recently-announced projects. This bulletin provides an overview of current and announced programs that specifically support Indigenous equity participation in major energy and infrastructure projects across Canada.

Federal – Canada Infrastructure Bank Indigenous Equity Initiative

In November 2023, the federally-funded Canada Infrastructure Bank ("CIB") announced its new Indigenous Equity Initiative, which offers loans (not loan guarantees) specifically in support of Indigenous communities purchasing equity stakes in projects where the CIB is also investing. 2 The CIB's mandate includes clean power, green infrastructure, public transit, broadband, and trade and transportation. 3

Qualifying criteria include the following: 4

  • CIB must be investing in the project for an Indigenous community proponent to access a loan;
  • The project must be located on Indigenous traditional territory;
  • Communities can invest through their community-owned economic development entities; and
  • Project sponsors must demonstrate the financing gap that exists for the purchase of the Indigenous equity stake.

Investments can range from $5M-$100M, and up to 90% of the Indigenous equity interest. 5 Loans are available from financial close to substantial completion or commercial operation date. 6

This program differs from the CIB's current Indigenous Community Infrastructure Initiative 7 (the "ICI") in that the ICI required a threshold proportion of Indigenous investment (20%), whereas the IEI does not require a minimum percentage threshold investment.

Project Examples:

  • Nova Scotia Energy Storage Project, announced in February 2024. 8 The project will be jointly owned between Nova Scotia Power Inc. and a limited partnership owned by 13 Mi'kmaw communities. This is the only announced project under this program to date.

Federal – National Benefits Sharing Framework

The federal government has announced a Federal National Benefits Sharing Framework (the "Framework"), however details of certain aspects of the Framework have not yet been announced.

The 2023 Federal Budget referenced the Framework and restated the federal Government's commitment to "advancing opportunities for Indigenous communities to participate as partners in major projects". 9 Funding was provided for Natural Resources Canada ("NRCAN") to begin consultations on developing the Framework which is ongoing, and to fund CIB loans as noted above for Indigenous communities purchasing equity stakes in infrastructure projects in which the CIB is already investing. 1011

In the NRCAN 2024-2025 Departmental Plan, the Department confirmed that it is "working with Federal and Indigenous partners to develop a National Indigenous Loan Guarantee Program, as the cornerstone of [the Framework], to help ensure Indigenous communities benefit from major resource projects." 12

Therefore, although details have yet to be announced, the federal government has indicated that a federal Indigenous Loan Guarantee Program is under development. Fasken will continue to monitor for announcements concerning details of this federal program.

Alberta – Alberta Indigenous Opportunities Corporation

In 2019, Alberta established the Alberta Indigenous Opportunities Corporation (the "AIOC"), which introduced a program offering loan guarantees starting at $20M. 13 To date, loan guarantees of up to $250M have been provided. 14 The purpose of the loan guarantee is to reduce risk to lenders if an investor fails to meet its commitment to pay. The loan guarantee can reduce the costs of borrowing from financial institutions, and can increase the amount borrowed and therefore invested. 15

Eligible projects under the program require that one or more Indigenous groups 16 invest a total of at least $20M in a project or related infrastructure that falls within the authorized industries identified under the regulations. 17 Authorized projects include projects and related infrastructure in energy, mining, forestry, agriculture, telecommunications, or transportation. 18 Projects located partially or entirely outside of Alberta are eligible, provided the project "can demonstrate a clear benefit to the Province of Alberta". 19

Indigenous groups outside of Alberta are eligible to apply, provided "they are partnered with one or more Alberta-based Indigenous groups collectively investing at least 25% of the total value." 20

Program support is discretionary and four evaluation criteria are considered: benefits to Indigenous communities, commercial and investment viability, skill and expertise of the project's management team and third-party co-investors, and overall strength of the application. 21

Project Examples:

  • Athabasca Trunkline, announced September 2022. Twenty-three First Nation and Métis communities acquired an 11.57% interest in seven Enbridge-operated pipelines. The AIOC provided a $250M loan guarantee. 22
  • Cascade Power Plant, announced June 2020. Six First Nations obtained an equity interest in a $1.5B, 900 MW combined cycle gas turbine power plant. The AIOC provided a $93M loan guarantee. 23

Saskatchewan – Saskatchewan Indigenous Investment Finance Corporation

In June 2022, the Saskatchewan Indigenous Investment Finance Corporation ("SIIFC") was launched to provide loan guarantees to support Indigenous equity participation in major projects in the natural resource and value-added agriculture sectors. 24 The SIIFC provides loan guarantees of $5M to $75M to eligible projects, however loan guarantees outside of this range are possible on authorization by the minister or Lieutenant Governor in Council. 25

Applicants must be an Indigenous community or organization. 26 Eligible projects or related infrastructure include the following: 27

  • Natural resource development, including forestry mills, mining, energy (including oil and gas production or refining and power generation) and carbon capture utilization and storage, but not including mineral or oil and gas exploration. 28
  • Value-added agriculture, including processes such as canola crushing or oat milling, but not including facilities solely dedicating to cleaning, bagging, handling, or storing primary products. 29

Projects occurring outside of Saskatchewan can be eligible for the SIIFC program, "granted that the project will bring demonstrable economic benefits to Saskatchewan and Saskatchewan's First Nations and/or Métis communities." 30

Loan guarantee projects are subject to budget availability and risk profile associated with the project. 31

Project Examples:

  • We are unaware of any projects supported by the SIIFC to date.

Ontario – Aboriginal Loan Guarantee Program

Launched in 2009, 32 the Ontario Aboriginal Loan Guarantee Program ("ALGP") supports Indigenous equity participation in electricity infrastructure projects in Ontario. 33 Under the program, up to $1 billion in loan guarantees are available. 34

The program provides loan guarantees for financing 75% of eligible equity investment in projects and is available to entities that are wholly-owned by Indigenous communities. 35 Project eligibility is discretionary.

Requirements include experienced project proponents or partners, an agreement in place to purchase energy or regulatory approvals in place for rate-related projects, and a financial plan submitted that is satisfactory to the Province. 36 Additional evaluation criteria includes other financing arrangements, a project agreement in place, a satisfactory corporate structure, the ability for the applicant to influence key decisions of the project, and risk mitigation measures. 37

Project Examples:

  • Wataynikaneyap Power Grid Connection Project, still under construction. Twenty four First Nations obtained a 51% equity interest in a $1.8B, 1,800 km transmission line project located in northern Ontario. 38 The ALGP provided a loan guarantee to support a $220M loan. 39
  • Rainy River Solar, completed in 2015. Rainy River First Nation obtained a majority equity interest in three solar generation projects with capacity of 25 MW. 40
  • Bruce to Milton Transmission Line, completed in 2012. Two First Nations obtained an equity interest of 34.2% in a 176 km, 500 kV transmission line. 41

British Columbia – Budget 2024 Announcements and New CIB Program

On February 22, 2024, the British Columbia government released Budget 2024, which announced a new provincial Indigenous equity loan program that will be established in 2024. 42 Specifically, the announcement stated that "Budget 2024 includes legislation to establish a First Nation Equity Financing special account". 43 While still subject to legislative approval, the program will include: 44

  • A $10M inaugural balance to support immediate capacity needs for First Nations actively considering equity participation in priority projects, and for provincial government costs of operationalize the program;
  • Authority for Treasury Board to dedicate portions of revenues realized through prioritized projects to the special account; and
  • Authority for the Treasury board to expediate provincial government guarantees for equity loans undertaken by First Nations for the purpose of acquiring an equity interest in priority projects. Consistent with the approach in other jurisdictions, the special account will have a cumulative loan guarantee limit of $1B and will be reviewed annually.

Note also that on March 12, 2024, the Canada Infrastructure Bank announced an agreement reached with BC Hydro to provide Indigenous loan packages to winning bidders in the 2024 BC Hydro Call for Power. 45 Draft credit documents will be available to all Proponents who register interest in the procurement at CFP-BCH-2024@cib-bic.ca. The CIB anticipates these documents to be available on the date that BC Hydro releases the Call Request for Proposal. 46

Conclusions

Government backed loan and loan guarantee programs continue to play a key role in increasing Indigenous equity participation in projects across industries in Canada. With the support of current and recently announced programs, we only expect this trend to continue to increase.

Footnotes

1. See "Four Trends in Equity Participation in Canada" (6 March 2023), online: Faskenhttps://www.fasken.com/en/knowledge/2023/03/6-four-trends-in-indigenous-equity-participation-in-canada and "Indigenous Equity in Energy Infrastructure Projects in Canada" (22 November 2023), online: Faskenhttps://www.fasken.com/en/knowledge/2023/11/indigenous-equity-in-energy-and-infrastructure-projects-in-canada.

2."Indigenous Equity Initiative (IEI) Overview" (November 2023) at 2, online (pdf): Canada Infrastructure Bankhttps://cdn.cib-bic.ca/files/Investment/EN/2023-11-21-Indigenous-Equity-Initiative-Overview.pdf [IEI Overview].

3. CIB's mandate includes clean power, green infrastructure, public transit, broadband, and trade and transportation; see "Priority Sectors" (2024), online: Canada Infrastructure Bank < https://cib-bic.ca/en/sectors/priority-sectors >.

4. IEI Overview at 3.

5. IEI Overview at 4.

6. IEI Overview at 4.

7. "Indigenous Community Infrastructure Initiative (ICII) Overview" (2023), online (pdf): Canada Infrastructure Bankhttps://cdn.cib-bic.ca/files/Investment/EN/ICII-Overview-2023.pdf.

8. See "CIB committing $138.2 million to Nova Scotia Energy Storage Project" (15 February 2024), online: Canada Infrastructure Bank < https://cib-bic.ca/en/medias/articles/cib-committing-138-2-million-to-nova-scotia-energy-storage-project/ >.

9. Canada, Department of Finance Canada, Budget 2023, (Ottawa: Department of Finance Canada, 2023) at PDF 140, online (pdf) Government of Canadahttps://www.budget.canada.ca/2023/pdf/budget-2023-en.pdf [Federal Budget 2023].

10. Canada, Department of Finance Canada, Budget 2023, (Ottawa: Department of Finance Canada, 2023) at PDF 140, online (pdf) Government of Canadahttps://www.budget.canada.ca/2023/pdf/budget-2023-en.pdf [Federal Budget 2023].

11. E.g. see "National Benefits-Sharing Framework" (30 August 2023), online: Government of Canada < https://natural-resources.canada.ca/our-natural-resources/indigenous-peoples-and-natural-resources/national-benefits-sharing-framework/25261. >

12. "Natural Resources Canada 2024-25 Departmental plan" (1 March 2024), online: Government of Canada < https://natural-resources.canada.ca/transparency/reporting-and-accountability/plans-and-performance-reports/departmental-plan/natural-resources-canadas-2024-25-departmental-plans-glance/25622 >.

13. "Alberta Indigenous Opportunities Corporation Loan Guarantee Investment Program Guidelines" (13 April 2022) at PDF 2, online (pdf): Alberta Indigenous Opportunities Corporation < https://theaioc.com/wp-content/uploads/2023/05/220413-AIOC-Loan-Guarantee-Investment-Program-Guidelines-Updated-Final-1.pdf > [AIOC Guidelines]; Alberta Indigenous Opportunities Corporation Regulation, AR 162/2019, s 1(1) [AIOC Regulation].

14. E.g. see "Athabasca Trunkline" (2024), online: Alberta Indigenous Opportunities Corporation < https://theaioc.com/projects/athabaska-trunkline/ >.

15. E.g. see AIOC Guidelines at PDF 10.

16. Defined in the Alberta Indigenous Opportunities Corporation Act, SA 2019, c A-263 [AIOC Act], s 3(1) as the following: (a) Indian bands as defined by the Indian Act (Canada), (b) Metis settlements established by the Metis Settlements Act, (c) Metis groups as defined by the regulations, (d) other entities approved by the Minister by order as falling within the mandate of the Corporation, and (c) entities that are fully owned by the entities identified in clause (a), (b), (c) or (d). Additionally, the Lieutenant Governor in Council may, by regulation, identify additional entities as "indigenous groups", AIOC Act, s 3(2).

17. AlOC Regulation, s 1(1).

18. Authorized Natural Resource Sectors Regulation, AR 27/2020, ss 1-1.1.

19. AIOC Guidelines at PDF 10.

20. AIOC Guidelines at PDF 2.

21. AIOC Guidelines at PDF 3-6.

22. "Athabasca Trunkline" (2024), online: Alberta Indigenous Opportunities Corporation < https://theaioc.com/projects/athabaska-trunkline/ >; "Equity pipeline partnership unveiled between Enbridge and 23 Indigenous Communities" (18 September 2022), online: Enbridge < https://www.enbridge.com/stories/2022/september/landmark-equity-pipeline-partnership-between-enbridge-and-23-indigenous-communities >.

23. "Cascade Power Project" (2024), online: Alberta Indigenous Opportunities Corporation < https://theaioc.com/projects/cascade-power-project/ >.

24. "New Investment Program Launched to Increase Indigenous Economic Opportunities" (1 June 2022), online: Government of Saskatchewan https://www.saskatchewan.ca/government/news-and-media/2022/june/01/new-investment-program-launched-to-increase-indigenous-economic-opportunities.

25. "SIIFC Program" (2022), online: Saskatchewan Indigenous Investment Finance Corporationhttps://siifc.ca/program/#overview [SIIFC Overview]; Saskatchewan Indigenous Investment Finance Corporation Regulations, Sask Reg 16/2022, s 2.

26. Under the Saskatchewan Indigenous Investment Finance Corporation Act, SS 2022, c 38, s 2, an "Indigenous community or organization" means (a) a Saskatchewan First Nation or Tribal Council; (b) an economic development corporation owned by Métis Nation – Saskatchewan, a Métis Nation – Saskatchewan Region, or a Métis Nation – Saskatchewan Local; (c) an economic development corporation that is owned by a self-declared Northern Métis municipality in Saskatchewan and has a board of directors, the majority of whom are registered members of Métis Nation – Saskatchewan; (d) any other entity approved by the minister as falling within the mandate of the SIIFC; or (e) a corporation wholly owned by an entity mentioned in clauses (a) to (d).

27. SIIFC Overview.

28. SIIFC Overview.

29. "Value-added agriculture" means the physical transformation or upgrading of any raw or primary agriculture product, byproduct, or waste into a new or updated product, SIIFC Overview.

30. SIIFC Overview.

31. SIIFC Overview.

32. "Creating Jobs and Promoting Sustainability for Aboriginal People with the Aboriginal Loan Guarantee Program" (4 September 2009), online: Ontario Ministry of Energyhttps://news.ontario.ca/en/backgrounder/8801/creating-jobs-and-promoting-economic-sustainability-for-aboriginal-people-with-the-aboriginal-loan-guarantee-program.

33. "Overview of the Aboriginal Loan Guarantee Program (ALGP)" (2024), online: Ontario Financing Authorityhttps://www.ofina.on.ca/algp/.

34. "Frequently Asked Questions" (2024), online: Ontario Financing Authorityhttps://www.ofina.on.ca/algp/faq.htm

35. "Eligibility and Evaluation Criteria" (2024), online: Ontario Financing Authorityhttps://www.ofina.on.ca/algp/program/eligibility.htm [ALGP Eligibility Criteria].

36. ALGP Eligibility Criteria.

37. ALGP Eligibility Criteria.

38. "The Partnership" (2019), online: Wataynikaneyap Power https://www.wataypower.ca/ownership/partnership; "The Wataynikaneyap Transmission Project" (2024), online: FortisOntario < https://www.fortisontario.com/our-work/wataynikaneyap-transmission-project >.

39. Ontario, Ontario Financing Authority, 2020 Annual Report (Toronto: Ontario Financing Authority) at PDF 14, online (pdf): Government of Ontario < https://www.ofina.on.ca/pdf/OFA_ar20_en.pdf >.

40. Ontario, Ministry of Finance, Budget 2015 (Toronto: Ministry of Finance, 2015) at PDF 192, online (pdf): Government of Ontario < https://collections.ola.org/mon/29004/330304.pdf > [Ontario Budget 2015]; "Rainy River First Nations, Connor Clark & Lunn and Terrma Capital Announce Financing for 25 MW Solar Project" (13 May 2014), online: Cision < https://www.newswire.ca/news-releases/rainy-river-first-nations-connor-clark--lunn-and-terrma-capital-announce-financing-for-25-mw-solar-project-514289271.html >.

41. "The Line" (2024), online: B2M Limited Partnershiphttps://b2mlp.ca/the-partnership/the-line/; "The Partners" (2024), online: B2M Limited Partnershiphttps://b2mlp.ca/the-partnership/the-partners/; Ontario Budget 2015 at PDF 192.

42. British Columbia, Ministry of Finance, Budget 2024 (Victoria: Ministry of Finance, 2024) at PDF 63, online: Government of British Columbia < https://www.bcbudget.gov.bc.ca/2024/pdf/2024_Budget_and_Fiscal_Plan.pdf > [BC Budget 2024].

43. BC Budget 2024 at PDF 63.

44. BC Budget 2024 at PDF 63.

45. "Canada Infrastructure Bank Announces Loan Package for Indigenous Equity in BC Call for Power" (13 March 2024), online: Clean Energy BChttps://cleanenergybc.org/cib-announces-loan-package-for-indigenous-equity-in-bc-call-for-power/.

46. "2024 Call for Power" (2024), online: BC Hydrohttps://www.bchydro.com/work-with-us/selling-clean-energy/meeting-energy-needs/consultation.html.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.