Finding A Buyer the first order of Business for Ottawa
He said there have been expressions of interest from “multiple investors” in buying the project, and that the federal government has no intention of being the long-term owner.
One institutional investor in New York, who spoke on condition of anonymity, said that if the pipeline is built he expects the federal government to make $2 billion in profit when it eventually sells the asset.
Ottawa paid $13 per Kinder Morgan share and the investor said he had a target price of $35 over time, if the pipeline is built. “I would be shocked if the Canadian government didn’t make money,” he said.
Kinder Morgan has been under pressure for carrying too much debt, he added, and while the Texas company may have been legitimately concerned about the prospect of delays, it was also presented a good opportunity to de-leverage.
The caveat, obviously, is whether the pipeline will be built.
Morneau said once again Tuesday that the project is in the national interest and that because resources cross provincial boundaries it clearly falls under federal jurisdiction. That claim is contested by the government of British Columbia and increasingly militant environmental and Indigenous protesters.
The struggle to push Trans Mountain through in the face of such entrenched opposition is likely to be the most arduous this government has had to face. It may well have to crack down on civil disobedience in ways it would have preferred not to.
But Trudeau and his advisers have been preparing for this type of scenario since at least the fall of 2013, when the then-new Liberal leader spoke in favour of the Keystone XL pipeline at the Calgary Petroleum Club.
His support for the pipeline came with the proviso that it be part of an overall framework that included putting a price on carbon.
This “national energy strategy” was at the core of the Liberal commitment to a “strong economy and a clean environment” in the last election — and its implementation will be crucial to the government’s offer for re-election.
At the same time as the Liberals were drawing up their plans to buy Trans Mountain, the government’s budget implementation bill, containing the provisions to impose the federal carbon pricing “backstop” on recalcitrant provinces, was making its way through the House of Commons.
Ottawa’s grand bargain is still alive but could yet unravel in the face of hostility from the provincial government in B.C. (to the pipeline) and from potential new governments in Ontario and Alberta (to the carbon tax). Liberal ambitions rely on moving forward on these two files in synchronicity.
As far as the pipeline is concerned, Morneau assured Canadians that the federal government’s investment means it will be built.
Failure to follow through now really would be incomprehensible.
WE BELIEVE THIS IS THE BEST WAY TO PROTECT THOUSANDS OF ... JOBS AND THE SAFEST AND MOST EFFECTIVE WAY TO GET OUR RESOURCES TO WORLD MARKETS. — BILL MORNEAU