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Canada Infrastructure Bank Approves $1 Billion Loan for BC Ferries’ Chinese-Built Electric Vessels

Prime Highlights

  • Canada Infrastructure Bank to provide $1 billion loan to BC Ferries for new electric ships and terminal upgrades.
  • There is fear that the vessels would be built in China, which has attracted political criticism.

Key Facts

  • $690 million will cover four electric ferries; $310 million for electrification assets.
  • BC Ferries explains that the loan would save about $650 million in interest over the long term.

Key Background

The Canada Infrastructure Bank, a federal Crown corporation, has authorized BC Ferries for a low-interest loan of up to $1 billion. The funding will be used to procure four new electric ferries and construct related electrification infrastructure. Of this figure, $690 million will be set aside for the purchasing of ships while $310 million will go to terminal charging stations and technology improvements onboard. The action is the latest by BC Ferries in its quest to modernize its aging fleet and transition towards cleaner marine transportation.

BC Ferries President Nicolas Jimenez emphasized the importance of this financing, noting that purchasing these electric ferries would not have been possible without federal financing. The company also pegs a $650 million interest saving on the favorable terms of the loan. However, the fact that the vessels were ordered from China Merchants Industry Weihai Shipyard induced political backlash, particularly from federal regulators.

Transport Minister Chrystia Freeland was let down by the decision to award a contract to a Chinese shipbuilder. In a recent letter to BC authorities, she urged federal funds not to be used for the construction of ships abroad. The criticism comes amid increasing concerns for national economic interests as well as foreign procurement procedures. However, federal officials mentioned that no Canadian shipyards tendered for the project.

BC Ferries countered that the optimum value and capability accompanied the Chinese offer, highlighting that the firm reiterated its intention to be cost-efficient, environmentally friendly, and on time with replacing the fleet. Under pressure from politicians, BC Ferries is proceeding with the project, highlighting the requirements to replace aged ships and reduce emissions on its network. The controversy also stokes a wider debate regarding Canada’s shipbuilding capacity and public infrastructure policy.

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