AGDC tax exemption status to reduce Alaska LNG cost

In a recent ruling, the U.S. Internal Revenue Service determined the Alaska Gasline Development Corporation (AGDC) qualifies as a tax-exempt political subdivision of the State of Alaska under new and more stringent proposed IRS regulations.

“This is great news for the corporation and the Alaska LNG project,” stated AGDC president Keith Meyer. “Receiving a favorable tax ruling from the IRS was one of the expectations of the transition of the Alaska LNG project to state leadership.”

He noted the favorable ruling from the IRS will provide significant maneuvering room as the company shapes the financial structure of the Alaska LNG project.

As a political subdivision, AGDC will not be subject to federal income tax and can issue tax-exempt debt. The federal tax exemption can further reduce the cost of service on the system and can increase the competitiveness of the project while also improving overall returns to project stakeholders.

AGDC was not dependent on this ruling to make Alaska LNG economically viable, the company’s statement reads, however, the ruling creates the opportunity, under the right conditions, for lower cost debt financing and makes the project even more competitive.