Ottawa is betting big on a politically divisive pipeline project, spending $4.5-billion to buy the Trans Mountain expansion from Kinder Morgan. Finance Minister Bill Morneau, who announced the move Tuesday, calls the deal “the best way to protect thousands of good, well-paying jobs.” But big questions still remain about how the Trudeau government will handle B.C. and First Nations’ opposition to the pipeline, and when and how the pipeline will be built.
What Ottawa’s spending: The purchase price negotiated between Texas-based Kinder Morgan and Canada’s government is $4.5-billion, but that doesn’t include the construction and labour costs, so taxpayers will likely pay much more. By one bank’s estimate, Kinder Morgan walks away from the transaction with $1.2-billion more than the existing system’s value plus the money it’s spent so far on the expansion.
What it’s buying: The deal gives Ottawa control over the existing pipeline, the expansion project and the Burnaby marine terminal under a Crown corporation. The government plans to seek a buyer to eventually put Trans Mountain back into private hands, but Mr. Morneau said it also reserves the right to buy back the project it is working to build.
Globe and Mail – May 29, 2018.
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