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Canadian Indigenous group buys $511 million stake in Enbridge Westcoast pipeline

Enbridge, a Canadian pipeline operator, sold a stake in the Westcoast Natural Gas System to a group of 36 First Nations. This was the first deal that included financing through a federal loan program designed to help Indigenous groups to own parts of resource project.

Enbridge announced on Thursday that Stonlasec8 Indigenous Alliance would buy a 12.5% share in its Westcoast Pipeline for C$715,000,000 ($511.19million). The pipeline runs 2,900 km (1,802 mi) from the northeast of British Columbia to Canada-U.S. Border, with a daily capacity of 3.6 Billion cubic feet of gas.

First Nations in Canada are buying more stakes in energy companies as they look for economic benefits on their land. Companies, meanwhile, want to secure Indigenous support and raise capital to help them get regulatory approval.

Enbridge has signed equity deals with four Indigenous groups. This includes the sale in 2022 of a C$1.12 billion minority stake in seven Alberta Oil Pipelines to a First Nations group.

The Canadian government said that it was interested in selling an interest in the Trans Mountain oil pipeline, valued at C$34 billion, to Indigenous groups.

Stonlasec8 is set to receive C$400,000,000 in loan guarantees for the deal announced Thursday, which Enbridge claims has been in the works since two years.

The federal entity launched in December aims to provide Indigenous loan guarantees of up to $10 billion to help First Nations gain access to capital.

In a letter sent to the leaders of federal political parties in March, CEOs from 14 energy companies - including Enbridge - said that increasing Indigenous ownership is essential if Canada is to expand the oil and gas industry and build pipelines.

Chief David Jimmie is the president and chairperson of Stonlasec8 as well as the head of Squiala First Nation. He said that energy assets like the Westcoast Pipeline have crossed Indigenous territories for decades, but communities have not been able to reap any financial benefits.

He expressed his satisfaction that energy companies are increasingly recognizing the importance of co-ownership in securing First Nations support for projects on Indigenous lands.

Jimmie stated that "they recognize that without Indigenous involvement, it's going to be more difficult for you to approach these kinds of projects." Reporting by Amanda Stephenson, Calgary; Tanay Dhumal, Bengaluru. Editing by Vijay Kishore & Rod Nickel.

(source: Reuters)