Bill 14, the Alberta Indigenous Opportunities Corporation Act, represents the first attempt in Canada to set up a permanent structure that will facilitate investment and access to capital by Indigenous groups in natural resource projects and related infrastructure.
“The approach isn’t an entirely new one, but what makes it unique is that it moves beyond ad hoc measures to the creation of a specific and detailed structure,” said Lorne Rollheiser, a partner in Gowling WLG’s Calgary office.
Initiatives in other provinces, such as Ontario’s Aboriginal Loan Guarantee Program and the incentives Ontario provides for Aboriginal projects in its feed-in tariff, are of much smaller scope and lack the infrastructure created by the Alberta program.
Indeed, Bill 14, which received royal assent on Oct. 30, 2019, and comes into force on proclamation, creates a Crown corporation, the Alberta Indigenous Opportunities Corporation (AIOC) boasting a $1 billion backstop in loan guarantees and other financial tools to help Indigenous communities invest in major natural resource projects.
“This legislation will likely put in place building blocks to facilitate renewable and other energy projects in Alberta,” said Scott Smith, Rollheiser’s partner in Vancouver.
The company, with a permanent board of directors, is expected to be fully operational in the spring of 2020 with regulations formulated shortly thereafter. The government has been at pains to point out that AIOC will operate at arm’s length and independently, although it will ultimately report to the minister.
Included among those eligible for AIOC assistance will be Indian bands as defined by the Indian Act, Métis settlements under the Métis Settlement Act, Métis groups as defined by the regulations, other entities approved by the minister or cabinet, and wholly owned entities of all these groups.
Interestingly, the legislation raises the prospect of involvement by out-of-province Indigenous groups. Although such involvement is not specifically referenced in the legislature, Alberta Premier Jason Kenney has mused publicly that the AIOC’s mandate may also capture Indigenous communities in British Columbia, so long as the project in question benefits Alberta.
“The devil will be in the details of the project so far as the involvement of B.C. groups is concerned,” Rollheiser said.
However that may be, AIOC will boast a broad range of financial tools, including grants and contributions; making or taking on loans; loan guarantees; purchasing equity; and entering into joint ventures and partnerships.
“This is clearly not just a shell Crown corporation trying to do good things around the province,” said Luke Morrison, a partner in Bennett Jones LLP’s Calgary office. “It’s designed to take specific steps to deal with the barriers that have arisen for Indigenous investment.”
According to Morrison, close examination of the legislation reveals a scheme that reflects “the troubles Indigenous groups have in getting deals done.”
Not surprisingly, the key issue is access to capital.
“For example, First Nations had an opportunity to purchase an interest in the Pacific Trails Pipeline, but couldn’t do it for lack of funds,” Smith said. “And our firm is currently involved in a transaction where Indigenous groups have a chance to participate in an equity project but won’t be able to do it without loan guarantees from government.”
It’s precisely this type of gap that AIOC is targeting.
“AIOC is aimed at addressing what private interests can’t in providing Indigenous groups with access to capital,” Rollheiser said. “It isn’t a fit for everyone and is intended for those who would not be able to go forward without this kind of governmental support.”
Indeed, Bill 14 comes in the wake of several years that have seen the organic development of a marketplace where First Nations and others team up to take advantage of co-ownership opportunities.
One example can be seen in First Nations’ acquisition of a 40 per cent stake in TD Greystone Asset Management Consortium’s pending acquisition of the 508-kilometre Alberta PowerLine from just west of Edmonton to Fort McMurray. Greystone is paying $300 million and assuming $1.4 million in debt from the current owners, Canadian Utilities Ltd. and Quanta Services Inc.
“The private sector has seen the opportunities in partnering with First Nations, and Bill 14 reflects the government’s recognition that it also has a strong commercial desire to do business with Indigenous communities,” said Will Osler, Morrison’s partner at Bennett Jones in Calgary.