Pipeline investors needn’t worry, says federal finance minister
If Kinder Morgan bails on Trans Mountain project, federal government would back new investors, says Morneau
Ottawa is offering to stand behind any and all financial backers of the divisive Trans Mountain pipeline expansion as the Liberal government tries to shore up investor confidence in a country racked with uncertainty over trade and U.S. tax changes.
The government is providing “indemnity” to help ease the political risks for any investors, be they Kinder Morgan — the project’s original architects — or otherwise, to ensure the controversial AlbertaB.C. project can proceed, said Finance Minister Bill Morneau.
And if Kinder Morgan were to abandon its plan to expand the existing pipeline, there are plenty of other investors out there willing to take up the cause, Morneau said — and they, too, will have the backing of the federal Liberal government.
“We believe it’s in the best interests of Canada and Canadians to get this project built,” Morneau told a news conference Wednesday across the street from Parliament Hill.
“It means thousands of good, well-paying jobs for Canadians. It means greater investor confidence and a fair price for our natural resources. It’s clear that we have the jurisdictional authority to ensure that it’s completed.
“That’s why we’re working diligently to remove the investment risks, the politically motivated investment risks, so that this project can go ahead as planned.”
Investors need certainty in order to back the project, Morneau said, but he steadfastly refused to disclose what sort of dollar figures are currently on the table.
The federal government greenlighted the expansion in 2016, but the company recently hit pause on all non-essential spending on the $7.4-billion project unless and until Ottawa could mitigate the ongoing concerns by Kinder Morgan’s deadline of May 31.
The Trans Mountain debate is just one of many sources of uncertainty, particularly with the unknown economic impacts related to the renegotiation of the North American Free Trade Agreement and major U.S. tax changes that some warn could hurt Canadian competitiveness.
Morneau’s announcement Wednesday came the same day as Kinder Morgan’s Calgary-based Canadian operation held its annual meeting. The federal offer appeared to be an effort to ratchet up the pressure in advance of the company’s approaching deadline.
Steve Kean, Kinder Morgan Canada’s chairman and CEO, acknowledged Morneau’s comments Wednesday as he reiterated the company’s position.
“We remain steadfast in our previously stated principles: clarity on the path forward, particularly with respect to the ability to construct through British Columbia, and ensuring adequate protection of our KML shareholders,” Kean said.
“While discussions are ongoing, we are not yet in alignment and will not negotiate in public.”
Morneau’s talks with Kinder Morgan had their genesis a month ago, when Prime Minister Justin Trudeau promised to deploy both financial and legislative tools to ensure the disputed expansion is able to proceed.
He instructed Morneau to sit down with Kinder Morgan to find a financial solution that would soothe their investors, and promised legislation reaffirming Ottawa’s authority to press ahead.
Ottawa’s position is that it approved the project after a rejigged environmental assessment and Indigenous consultation process, and in concert with the its climate change and oceans protection plan. Approval came in consultation with the previous B.C. Liberal government, which gave its consent to the project after its own conditions were met.
The election of NDP Premier John Horgan last year changed that. His minority government exists at the pleasure of the Green party, and on condition of his continued opposition to the project.