High noon approaches for pipeline expansion
The folks who run the Calgary Chamber of Commerce got a surprising call last week from federal Finance Minister Bill Moreau’s office with an even more surprising offer.
They wanted to know if Morneau could drop by this Wednesday and give a lunchtime keynote speech for their members and interested guests at a downtown hotel. This would be like William Shatner asking a science-fiction convention if he can stop by and sign autographs for the local Trekkies.
In other words, Morneau’s speech is now the hottest ticket in town. And nobody expects him to show up empty-handed.
The moves appear to herald a deal to save the Kinder Morgan pipeline expansion, especially since the company’s own self-imposed deadline for an agreement is this Thursday, the day after the speech.
The Canadian Press, meanwhile, reported that Morneau could reveal his pipeline plan “as early as Tuesday morning” after a cabinet meeting in Ottawa.
Taxpayers should brace for impact. With Kinder Morgan threatening to scrap the pipeline, and Prime Minister Justin Trudeau’s government promising Alberta that the pipeline will get built, it appears a heavy injection of public money is imminent.
Morneau earlier offered to “indemnify” the firm against losses caused by anti-pipeline obstructionism from John Horgan’s B.C. government, which opposes the pipeline on environmental grounds and is fighting the expansion in court.
But, judging by Kinder Morgan’s lukewarm response, it appears a bigger and more expensive bailout is in the works.
Morneau suggested Canadian pension funds might invest in the pipeline, stirring the interest of the Canada Pension Plan.
“If it’s an opportunity that has decent returns, then we’ll look at it,” said Mark Machin, CEO of the Canada Pension Plan Investment Board.
But it may not be that simple. The project is an expansion of an existing pipeline and right-of-way owned by Kinder Morgan Canada, the Texas-based company’s Canadian subsidiary. The federal government might be forced to buy out the entire Canadian operation, which has a market cap of $6 billion. Maybe the feds will get the pro-pipeline government of Alberta to put up taxpayers’ cash, too.
But, even if the governments of Alberta and Canada buy the firm, who is going to build and manage the pipeline? They might have to bring Kinder Morgan’s executives and contractors along for the ride.
These are unsettling scenarios for taxpayers, especially when you consider how our history is littered with can’t-miss government business investments that fell flatter than an oil slick.
Remember the Bricklin sports-car company? The New Brunswick government poured millions into it in the 1970s, only to watch it go bust.
How about the Sprung Greenhouse? The Newfoundland government figured they would get rich growing cucumbers. It turned out to be a money-losing lemon instead.
Closer to home, B.C. Hydro lost millions on the Raiwind power plant in Pakistan. And let’s not even mention the words “fast ferries,” shall we?
There’s a reason governments have been called “the investors of last resort.” It’s because any genuinely profitable business venture should have no problem finding private-sector backers willing to put their own money into it.
It’s possible Moreau could announce a plan for Canadian taxpayers to take over the pipeline on a temporary basis, with shares in the project to be sold to private investors later.
The clock has been ticking relentlessly. Now high noon for the Kinder Morgan pipeline has arrived. The pipeline fight will continue, though, no matter what is announced.