Finance Minister Bill Morneau and Natural Resources Minister James Carr speak at the National Press Theatre during a press conference in Ottawa on Tuesday, May 29, 2018. THE CANADIAN PRESS/Sean Kilpatrick

How will Ottawa finish a pipeline Kinder Morgan couldn’t?

Questions raised after federal government agrees to buy Trans Mountain pipeline for $4.5 billion

The federal government has provided few details so far since its announcement Tuesday morning about buying the embattled Trans Mountain pipeline, fueling questions about how it will recoup the billions it plans to spend.

Finance Minister Bill Morneau said Ottawa will cover up to $12 billion for an expansion that would triple the 65-year-old pipeline’s capacity to bring oilsands crude from Alberta to B.C. It follows B.C. Premier John Horgan’s continued efforts to halt the project to protect the coastline, and Kinder Morgan’s signal that it may abandon the project in the face of such opposition.

UBC political science professor Kathryn Harrison called the Trudeau government’s decision confusing.

“I was taken aback. It was such a huge investment in the fossil fuel industry, but also for the federal government to be putting that many billions of dollars into a project that the private sector is walking away from – it seems quite risky,” Harrison said.

“This seems to be happening on a scale that’s unprecedented.”

Morneau would only say finishing the project was in “the national interest” and that his government will recover costs by finding a buyer for the pipeline in the future.

A finance ministry spokesperson later said in an email to Black Press Media that the purchase would be financed by a loan and that the $4.5 billion would be recorded as an asset, not a debt, and not add to Ottawa’s current $18.1-billion deficit.

READ MORE: Pipeline back in action after spill north of Kamloops

Kenneth Green, the Fraser Institute’s senior director of natural resource studies, said he thinks the $12-billion cap on spending is meaningless.

Should it go over-budget, Green said, the feds won’t just be able to stop paying.

“You can’t stop in the middle. It’s not going to do you much good if you get halfway there,” he said. “They’ll either print more money or they’ll have the Canadian Pension Plan fund it.”

While a deal this massive is rare, Ottawa has bailed out companies before.

Last year, Prime Minister Justin Trudeau promised $372.5 million in interest-free loans to Bombardier, a move that sparked public outcry when the company’s top executives were revealed to still have received hefty bonuses.

In 2009, Ottawa spent $13.7 billion USD bailing out General Motors and Chrysler. Several billion of those dollars has yet to be paid back.

“I don’t think anyone’s going to buy [the pipeline] till it’s actually done,” Green said. “And then it’ll be a buyer’s market. Will you get your $12 billion back? I doubt it.”

Harrison doesn’t rate the chances of finding a buyer too highly either.

“It is telling that Kinder Morgan hasn’t found one,” she said. “The big experienced pipeline operators don’t seem to be stepping up… and that seems to say a lot.”

READ MORE: Elizabeth May says pipeline will cost taxpayers billions more

Kris Sims, B.C. director of the Canadian Taxpayers Federation, was initially in favour of the Trans Mountain expansion, but said her support is wearing thin now with the $12-billion bill being handed to taxpayers.

Sims said Ottawa capitulated too easily, getting to work on a solution the moment Kinder Morgan announced its May 31 deadline to decide whether it could continue with the project.

“The federal government jumped up and down and said, ‘Let us know if you need any tax dollars,’” said Sims. “From a negotiating standpoint, it’s a very weak place to start.”

Sims worried Canadians could be on the hook for more than just building the pipeline.

“If a company, or a community, were to sue in the case where they would have otherwise sued Kinder Morgan?”

Morneau’s commitment still doesn’t guarantee the expansion will be built.

Multiple court cases are still pending against it, including the constitutional reference question from the B.C. government. Filed last month, it asks if B.C. has the authority to limit the amount of bitumen transported through the province.

A claim in the federal Court of Appeal alleges there hasn’t been adequate consultation with First Nations. This includes the Squamish First Nation, which is likely to appeal this week’s B.C. Supreme Court decision to dismiss its challenge of the environmental assessment process for the pipeline.

Arrests also continue at the Trans Mountain terminal in Burnaby, with at least 192 demonstrators so far facing charges of criminal contempt.

“Just because they’re throwing taxpayers’ money at it now, how is this going to stop the B.C. government from taking this to court?” Sims asked. “How is this going to appease the protesters who are threatening to block this?”


@katslepian

katya.slepian@bpdigital.ca

Like us on Facebook and follow us on Twitter.

Just Posted

Over-budget bids cause delay of four Surrey school projects

Two projects have gone back out to tender, two awaiting ‘revised budget approval’ from Ministry of Education

Fees ensure patients have access to parking at SMH, FHA says

Fraser Health Authority hasn’t heard yet from city hall about pay parking at Surrey hospital

Free hospital parking a non-starter in White Rock

City considering task force to look at parking generally – Walker

Surrey memories: How the ‘IGUISBCSIR’ Facebook page became a hub for anecdotal history

Former Whalley resident Wes Mussato launched the group in 2011, 11 years after he’d moved to Ontario

VIDEO: B.C. legislature clerk, sergeant at arms suspended for criminal investigation

Clerk of the House Craig James, Sergeant-at-arms Gary Lenz on administrative leave

Former NHL player and coach Dan Maloney dies at 68

Maloney coached the Toronto Maple Leafs and Winnipeg Jets

Ex-MSU president charged with lying to police about Nassar

Lou Anna Simon was charged Tuesday with lying to police during an investigation

Police aim to prevent retaliation after Hells Angel found dead under B.C. bridge

IHIT confirms Chad Wilson, 43, was the victim of a ‘targeted’ homicide

Otter makes a snack out of koi fish in Vancouver Chinese garden

Staff say the otter has eaten at least five fish

Police looking into two more incidents at private Toronto all-boys’ school

Police and the school have said two of the prior incidents involved an alleged sexual assault

B.C. lumber mills struggle with shortage of logs, price slump

Signs of recovery after U.S. market swings, industry executive says

25% of Canadians still won’t say they use pot, survey says

Statistics Canada poll says Canadians on average were 18.9 years old when they first tried pot.

Canucks’ 50/50 jackpot expected to surpass $1 million

The guaranteed prize for one lucky winner will be $500,000 minimum when Vancouver hosts LA Nov 27

Most Read