canada: January 21, 2008

The Canadian government historically has always welcomed foreign investment as long as such investment stimulated the economy providing a net financial benefit to the country. However, there is certain legislation being enacted that soon may change this thinking.

The Canadian Government has begun to make changes that will limit the Investment Canada Act or ICA which governs investments by non-Canadians in acquiring control of Canadian businesses.

In December 2006, the announcement by the minister of Finance gave the energy industry something to think about concerning upcoming changes. At that time, some thought that by limiting foreign investment, Canada would be in a less vulnerable position when major energy companies are owned by foreign governments. Additionally, it was thought limited foreign ownership would help the country’s national security.

The government announcement limiting foreign investment in the energy sector will no doubt have repercussions throughout the industry. In the past year, Taqa North, a subsidiary of the Abu Dhabi National Energy Company, acquired Pioneer Canada. Should the government limit foreign investments in the energy industry, deals similar to the Pioneer Canada acquisition may not occur.

Canadian energy requirements are growing and without investment (foreign or domestic) into new generation/transmission resources, we may find ourselves shorting ourselves in the long term.