$4.5 BILLION

Federal government buying Trans Mountain pipeline

OTTAWA — The federal Liberal government is spending $4.5 billion to buy Trans Mountain and all of Kinder Morgan Canada’s core assets, Finance Minister Bill Morneau said Tuesday as he unveiled the government’s long-awaited, big-budget strategy to save the plan to expand the oilsands pipeline.

In return, Kinder Morgan will go ahead with its original plan to twin the pipeline this summer while the sale is finalized, which likely won’t happen until August, Morneau told a news conference in Ottawa.

Once the sale is complete, he said, Canada will continue the construction on its own, with a view to eventually selling the whole thing down the road, once market conditions would allow it to get the best price.

Morneau presented the options during an early-morning cabinet meeting Tuesday before ministers signed off on the chosen option, which comes just days before the company’s self-imposed May 31 deadline and is still subject to the approval of Kinder Morgan shareholders.

“We believe this is the best way to protect thousands of wellpaying jobs and the safest and most effective way to get our resources to world markets,” Morneau told a news conference in Ottawa after the meeting, Natural Resources Minister Jim

Carr at his side.

“Make no mistake: this is an investment in Canada’s future.”

Pressed about why the federal government’s $4.5-billion price tag was so much lower than Kinder Morgan’s stated $7.4-billion project value, Morneau said Ottawa was purchasing all the relevant assets — but he studiously avoided saying whether construction would increase costs.

“We are purchasing the assets; we are purchasing the existing assets, and the investment in the twinning of that pipeline, and those assets are what is required for us to move forward with the expansion,” he said.

“It allows us to move forward with the investments required to get the expansion completed and delivering the value that we know it can deliver to the Canadian economy.”

He hinted, however, that there would be additional costs, to be defrayed by the revenue generated by the pipeline itself.

“It creates effectively a toll, a user-pay, to be paid by the oil companies. So the additional investments will be dealt with in that way,” Morneau said.

“This is a project that will not have a fiscal impact. When you’re making an investment, you’re buying an asset, and that is something that goes on the balance sheet. So there is no fiscal hit with this purchase.”

Export Development Canada will finance the purchase, which includes the pipeline, pumping stations and rights of way along the route between Edmonton and Vancouver, as well as the terminal in Burnaby, B.C., where oil is loaded onto tankers for export.