The CIB, established in 2017, is a key feature in Justin Trudeau’s infrastructure spending program. It has made just one investment thus far
The Canada Infrastructure Bank has been in talks with the proponents of a $1.2-billion hydroelectric transmission line that would supply emissions-free power to a handful of communities and two major mines in Nunavut, according to a person familiar with the discussions.
Both the bank and the federal government have been in talks over the past year to help finance the Kivalliq Hydro-Fibre Link project, a little-known transmission line leading 900 kilometres from northern Manitoba to the eastern edge of the territory, said the person, who was granted anonymity due to the commercial sensitivity of the discussions.
The bank did not immediately confirm whether it had been in discussions around the project. Finance Canada officials did not respond to a request for comment.
The government alluded to the potential investment — for which details still need to be arranged — in its annual budget on Tuesday. It said the bank had “identified” hydropower and electric transmission lines as areas of interest as it gradually rolls outs its $35-billion spending plans, and singled out “northern communities” as potential regions where the bank could invest.
The CIB, established in 2017, is a key feature in Prime Minister Justin Trudeau’s infrastructure spending program, in which Ottawa plans to spend as much as $190 billion over the next 12 years to build new roads, telecoms lines and other projects. It has made just one investment thus far.
The proposal to build the Kivalliq Hydro-Fibre Link is being led by a partnership between the Kivalliq Inuit Association and Anbaric Development Partners, a Massachusetts-based firm. Anbaric has also signed an agreement with the Ontario Teachers’ Pension Plan Board to seek out clean energy investment opportunities.
The Kivalliq association has called the project a critical “electric backbone” for the local economy, while local government officials are firmly in support of the transmission line. The proposal includes a fibre optic cable that would bring high speed internet to the region for the first time, as well as emissions-free hydroelectric power that would allow Inuit communities to shift away from diesel generation, the association said.
The proposed corridor would also feed two critical mines, including Agnico Eagles Mines Ltd.’s Meliadine gold project, slated to come online mid-2019. The company has said it could account for as much as 25 per cent of the province’s GDP contribution in coming years.
The Kivalliq Inuit Association has been lobbying Ottawa on the project for some time. On Feb. 4, members of the organization met with then-Treasury Board President Jane Philpott and other officials in Ottawa in a bid to secure funding for the project. Weeks later, and less than a month before the 2019 budget was released, Ottawa put $1.6 million toward a feasibility study on the transmission line, scheduled to be completed in a year.
“We’re trying multiple angles to get as much funding as we can for this project,” said Gabriel Karlik, executive director of the association.
For us it would be first time that southern Canada is actually connected to northern Canada.
As part of its early-stage consultations, the association is still looking to identify a set route for the hydro and fibre optics line. Part of those discussions will involve talks with the Manitoba Dene, whose ancestral lands lie just south of the border with Nunavut.
The hinting comments made by Ottawa in the budget raise questions about the still-uncertain role of the CIB within the current Liberal government. The infrastructure bank is mandated to spend its $35 billion at its own discretion and free of any political direction, typically on public transit projects, trade-related infrastructure and clean energy.
It did not respond to questions about where it plans to invest. Asked about the budget comments, a spokesperson for the CIB referred the National Post to the Finance department.
The bank was criticized on its first-ever investment last year, when it offered a $1.28-billion loan to the proponents of a Montreal light rail project at interest rates well below the current market rate. The investment followed an earlier suggestion from the Prime Minister’s Office in June 2017 that “it will be possible” for the bank to invest in the REM project once it was fully established, appearing to telegraph the later investment.
Meanwhile, the list of other potential hydroelectric projects that the CIB could invest in is limited.
Last year Manitoba signed a long-term agreement to supply 215 megawatts of hydro electricity to Saskatchewan, with plans to come online by 2022. But the project would likely be operated by the two provincial utilities and therefore wouldn’t likely require financial aid from the CIB.
Other inter-provincial hydroelectric lines have been shelved, including an additional corridor between B.C. and Alberta that has met resistance amid an ongoing political spat between the two provinces. A spokesperson with B.C. Hydro, which would supply such a power line, did not respond to multiple requests for comment.
Meanwhile, Hydro-Québec has also tapped the brakes in recent years on a proposal to supply Ontario with emissions-free hydro power.
“This is an ongoing discussion and at this point in time, we’re not there,” said company spokesperson Serge Abergel.
Hydro-Québec, like other Canadian utilities, has proposed a number of new hydroelectric lines into the northern U.S. to satisfy American demand for emissions-free electricity.
But the company was cautious about the notion of CIB funding over concerns it would be viewed by its U.S. competitors as a subsidy. The Quebec utility has been in a constant battle to prove to U.S. regulators that it is competing fairly with American power suppliers.
“Our concern with any federal subsidies is the message it sends to our export markets, and our message is: ‘no, we have never been subsidized by anything,’”
Karlik, executive director of the Kivalliq association, said the project Manitoba-Nunavut project, in contrast, would go a long way in reducing the heavy subsidies Ottawa pays to the North to offset their diesel generation costs.
“For us it would be first time that southern Canada is actually connected to northern Canada.”
By Jesse Snyder
Copyright Postmedia Network Inc., 2019