TransMtn.cost could spike byupto$1.9B
Kinder Morgan Canada says expanding the Trans Mountain pipeline could cost the federal government as much as $1.9 billion beyond the company’s original construction estimate and take 12 months longer to finish.
The figures are included in documents the company filed Tuesday with the United States Security and Exchange Commission related to its plan to sell the pipeline to the Canadian government for $4.5 billion.
The sale price does not include how much more Canadians will pay to finish twinning the pipeline between Alberta and British Columbia. Finance Minister Bill Morneau won’t say how much Ottawa expects to spend on construction because he fears that would affect negotiations with construction contractors which are now underway.
The $7.4-billion construction cost Kinder Morgan reported in February 2017 hasn’t been updated since the project hit political snags, construction delays and opposition in B.C.
The first update of any kind came Tuesday when Kinder Morgan filed required documents as the company gears up for a shareholder vote on the sale in Calgary on Aug. 30.
In those pages, the company looks at a few different construction cost scenarios as part of a fairness evaluation of the sale offer to the Canadian government. The most expensive scenario pegs construction costs at $9.3 billion, taking until December 2021 to complete — a full year after the current timetable of December 2020.
The government was quick to point out the figure is not an official cost forecast. An official in Morneau’s department, speaking on background because he was not authorized to speak publicly, said the numbers do not specifically reflect the government’s expectation of what the final project cost will be.
However Robyn Allan, an independent economist and former CEO of the Insurance Corporation of British Columbia, said Kinder Morgan wouldn’t evaluate the fairness of the sale based on numbers that have no bearing on reality.
Allan, who said she has expertise on a number of multibillion infrastructure projects, believes in the end $9.3 billion will seem like a steal compared to the final price tag.