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

Incumbents and acclaimed mayors win elections all across B.C.’s north

Fraser Lake saw their first female mayor elected

Mayoral results from across B.C.

Voters in 162 municipalities in B.C. set to elect mayor, council, school board and more

Every vote counts: 10 tightest races in B.C.’s municipal elections

Peachland saw their election decided by just one vote

Editorial: Actions speak louder than (Facebook) words

When Facebook first made its mainstream debut on the web, it was… Continue reading

VIDEO: This is what buying legal pot in B.C. looks like

Take a look inside B.C.’s first and only legal pot shop located in Kamloops

Tommy Chong says cannabis legalization makes him proud to be a Canadian

Legendary marijuana advocate and comedian celebrates cultural milestone at Kelowna event

One of Taiwan’s fastest trains derails, killing at least 18

The train was carrying more than 360 people

Scheer marks one-year countdown to federal election with campaign-style speech

Conservative Leader insists that it will be Justin Trudeau who ‘makes it personal’

Canada Post union announces rotating strikes in four Canadian cities

Mail will still be delivered but it will be delayed

B.C. VIEWS: Residents have had enough of catering to squatters

Media myth of homeless victims offends those who know better

B.C. man sets new Canadian marathon record at Toronto Waterfront Marathon

Cam Levins ran it in two hours nine minutes 25 seconds

B.C. Liberals’ hopes high as Nanaimo by-election approaches

Historically safe NDP seat vacated by long-time MLA Leonard Krog

Leaving B.C.’s electoral reform to a referendum is ‘ridiculous’: professor

B.C. voters getting ballots in the mail on proposal to change electoral system

Canada condemns killing of journalist in Saudi Arabia consulate in Turkey

The Saudi government claimed Jamal Khashoggi was killed in a ‘fistfight’

Most Read