(Updates with loan details, Alberta Premier comment on liquidity help)
By David Ljunggren and Kelsey Johnson
OTTAWA, April 17 (Reuters) - Canada will invest C$2.5 billion ($1.8 billion) in measures to help the hard-hit oil and gas industry during the coronavirus outbreak, which has killed 1,250 people in the country, Prime Minister Justin Trudeau said on Friday.
The sector, which accounts for 10.6% of Canada’s gross domestic product, has urged Ottawa to free up credit and cash to tackle the effects of the pandemic and rock-bottom oil prices.
Trudeau said energy sector workers have faced “layers of calamity” and Ottawa would invest C$1.7 billion to clean up orphan and abandoned wells in three provinces.
“Our goal is to create immediate jobs in these provinces while helping companies avoid bankruptcy and supporting our environmental targets,” he told reporters, saying the measures would maintain 10,000 jobs.
Ottawa is also setting up a C$750 million fund to provide repayable loans to companies so they can cut emissions of gases such as methane.
The government said later that Business Development Bank of Canada will offer energy companies commercial loans, worth C$15 million to C$60 million each, to supply cash flow for 12 months.
Alberta Premier Jason Kenney thanked Trudeau and said Ottawa was still looking at backstops to enable access to commercial borrowing rates for “sideswiped” industries of energy, aviation and tourism. He estimated the need for liquidity at C$15 billion to C$30 billion.
Finance Minister Bill Morneau told a separate briefing that companies were not interested in Ottawa taking equity stakes. He said more needed to be done to ensure large businesses had access to credit, and promised details soon.
Finance Ministry officials told unions representing airline workers on Wednesday they are mulling whether to provide low-interest repayable loans to companies, according to two sources familiar with the matter.
Funding to clean up orphan wells - those without a legal owner - is welcome news for farmers who lease land to oil companies, said Todd Plandowski, owner of a company that negotiates the agreements.
“They’re concerned about farming around these things,” he said.
Trudeau also said Ottawa would give C$962 million to regional development agencies to help small businesses and invest C$500 million to support arts, culture and sports.
Ottawa has unveiled C$115 billion ($82.08 billion) in direct spending to help companies and individuals deal with shutdowns. Officials said Canada’s death toll had hit 1,250, up from 1,048 on Thursday.
Many of the country’s 30,670 confirmed coronavirus cases have been recorded in seniors residences. Trudeau said 125 troops with medical experience would help staff in long-term care homes in the province of Quebec.
British Columbia released its most recent forecast model, showing that the number of hospitalizations due to the coronavirus is leveling off.
The province may begin to reopen schools and workplaces in mid-May, Health Minister Adrian Dix said.
Shutdowns will extend to the July 1 Canada Day celebrations on Ottawa’s Parliament Hill, officials said.
The Transport Ministry said it would require air travelers to wear a mask or face covering at screening points starting on Monday.
$1=1.4042 Canadian dollars Reporting by David Ljunggren and Kelsey Johnson in Ottawa; Additional reporting by Jeff Lewis and Moira Warburton in Toronto, Allison Lampert in Montreal and Rod Nickel in Winnipeg; Editing by Bill Berkrot and Leslie Adler