The Government of Canada recently released the 2024 federal budget (“Budget 2024”), which includes various new and ongoing commitments by it with the aim of supporting economic reconciliation.
Specifically, Budget 2024 provides additional details regarding the promised Indigenous Loan Guarantee Program (“ILGP”), which was first introduced in the Government’s 2023 Fall Economic Statement. The ILGP will provide up to $5 billion in loan guarantees to support the participation of Indigenous communities in energy and natural resource projects in Canada.
Indigenous communities often face roadblocks in accessing affordable capital due to restrictions on leveraging existing assets as collateral, which impacts communities’ abilities to borrow money. As a result, communities are often either unable to access capital, or capital is provided at a higher cost. Government guarantees such as the ILGP significantly improve access to capital and reduce the associated cost for communities.
The ILGP follows government Indigenous loan guarantee programs in British Columbia, Alberta and Saskatchewan, which have supported projects such as the purchase of oil and gas assets by 12 First Nations and Métis Settlements from Tamarack Valley Energy in December 2023.
Indigenous governments and their wholly owned and controlled entities will be eligible to apply for support through ILGP if they plan to make an equity investment in a natural resource or energy project located in Canada. Natural Resources Canada will oversee the applicant intake process and capacity building for applicants. Canada Development Investment Corporation will be forming a new subsidiary to manage applications, due diligence and to administer the eventual guarantee portfolio. To support the management and administration of applications and guarantees, the Government of Canada has committed to providing Natural Resources Canada with $16.5 million over the 2024-2025 and 2025-2026 fiscal years for management costs, including $3.5 million in capacity funding available to participating communities. The exact launch date of the ILGP has not yet been announced.
Indigenous communities planning or invited to invest in energy and natural resource projects throughout Canada should consider participating in the ILGP to ensure maximum benefit for their citizens and members.
MLT Aikins’ Indigenous practice group has extensive experience assisting First Nations and Métis communities with accessing capital through government loan guarantee programs across Western Canada. If you have questions about how this program may benefit you or your community, we encourage you to reach out to the authors or any other member of our Indigenous practice group.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.