‘WE’RE GOING TO GET THAT PIPELINE BUILT’
Trudeau defends risky move to spend $4.5 billion to buy controversial Trans Mountain project stonewalled by fierce opposition in B.C.
OTTAWA— Justin Trudeau’s government has embarked on a high-stakes strategy to save the Trans Mountain pipeline expansion, pledging $4.5 billion to buy existing assets and promising untold billions more to build a new pipeline to move Alberta’s oil to markets.
With a deadline two days away, the Liberal government on Tuesday announced its bigticket purchase in a bid to get the controversial pipeline built. With Alberta and British Columbia at loggerheads, it is a politically risky move that critics say betrays Trudeau’s promises to protect the environment and reconcile the concerns of Indigenous groups.
Finance Minister Bill Morneau told a news conference the federal government will create a Crown corporation to take over Kinder Morgan’s existing pipeline and assets, together with company personnel associated with its planned expansion.
The takeover will happen in August but the federal government is hoping to quickly find another private company willing to take on the project. If no buyer is found, Ottawa — and taxpayers — will foot the bill to build the pipeline.
Heading into cabinet early Tuesday, Trudeau was asked about the risks of his plan to taxpayers or the environment, but he was tight-lipped, saying only that “we’re going to get that pipeline built.”
Morneau defended the decision, saying $4.5 billion is a “fair price” for a project with “significant commercial value.” The deal ensures construction that was suspended April 8 by Kinder Morgan’s jittery investors will now resume immediately, with the federal government agreeing to a loan guarantee for the company to resume building — a cost baked into the overall $4.5-billion purchase price.
Conservatives slammed Trudeau for “screwing up” and being forced to nationalize an oil pipeline because he could not provide international energy investors the certainty they need. New Democrats hammered the government for pushing a project that will increase greenhouse gas emissions.
“You don’t spend $4.5 billion on a pipeline if you’re serious about climate change,” said NDP Leader Jagmeet Singh, who slammed Trudeau for having “no vision for the future.”
The pipeline purchase carries major risks for the Liberals, who were already facing a potential backlash in B.C., where opposition to the expansion runs high. As the backer of the project, the federal government is now on a collision course with Indigenous groups who oppose it.
“No means no — the project does not have the consent it requires, and we will not stand down no matter who buys this ill-fated and exorbitantly priced pipeline,” Grand Chief Stewart Phillip, president of the Union of B.C. Indian Chiefs, said in a statement.
B.C. Premier John Horgan — whose NDP government has gone to court to restrict the flow of heavy bitumen through the province — encouraged residents to express opposition to the project, saying they are “entitled” to protest.
Weeks of tense negotiations with Texas-based Kinder Morgan came to a head last Wednesday in Toronto after two days of intense talks be- tween the company’s four-person team, led by CEO Steve Kean, and five negotiators for the federal government, led by Trudeau’s principal adviser, Gerry Butts, and officials in Morneau’s office.
In the end, Ottawa and Kinder Morgan reached a deal that would see Kinder Morgan Canada begin construction for the start of the summer season on a proposal to twin the existing 1,150-kilometre pipeline, adding another 980 kilometres of new pipeline, in order to triple the capacity to ship Alberta crude oil to B.C. coastal waters.
Government officials say it is much harder for the B.C. government to regulate against a federal Crown-owned project than a private-sector proponent.
To sweeten the deal for any potential future buyer, the Trudeau government will extend indemnity or insurance to cover any “extraordinary” politically motivated delays caused by any province or municipality, and will even promise to buy back the project if it confronts losses in the courts or cannot complete the project despite “commercially reasonable efforts.”
Morneau said he has no interest in owning the pipeline over the long term and said Indigenous groups, pension funds “and others” have already expressed interest in buying in.
However, Conservatives, New Democrats and the Green party blasted Morneau for downplaying the hit to Canadian taxpayers, saying $4.5 billion won’t cover future construction costs.
Kinder Morgan has already spent about $1 billion on the pipeline expansion, and in December estimated the expansion cost at $7.4 billion.
Dennis McConaghy, a former Trans Canada pipeline executive and now a visiting fellow at Western University’s Ivey Business School, said construction costs could run to another $6 billion to $7 billion, given what is now an overly “ambitious” timeline to finish the project by 2020.