OTTAWA – The parliamentary budget officer estimated that the liberal government has paid the “full price” last year, when he purchased the oil pipeline of Trans Mountain to Kinder Morgan for $ 4.4 billion $.
Yves Giroux believes that the value of the pipeline, Trans Mountain and its widening project is between 3.6 and $ 4.6 billion. The price paid by the government was therefore in the upper range of the estimate made by the independent office of the Parliament.
Mr. Giroux argued Thursday morning in Ottawa as “s”it was the purchase of a car, one could say that the government has paid a heavy price, that it has not traded much and that he did not get as many offers or manufacturer rebates”.
The enlargement of the pipeline to nearly triple its capacity, would cost approximately $ 9.3 billion $ if the project was completed by December 31, 2021, according to the parliamentary budget officer. But if the project were to suffer construction delays or cost overruns, the office of Mr. Giroux is convinced that the government will have paid too much.
A pipeline route that is already in the oil from the oil sands of Alberta to a marine terminal in Burnaby, near Vancouver, British Columbia. The former owner of TransMountain, the american Kinder Morgan, who had been trying for years to increase the capacity of the oil pipeline has threatened to throw in the towel and the federal government finally purchased the infrastructure in August last year. Ottawa had indicated that the purchase price amounted to $ 4.5 billion, but Mr. Giroux believes that, after final adjustments, the net payment to Kinder Morgan rises rather to 4.4 billion $.
The analysis from the parliamentary budget officer shows that the project could have positive effects on the country’s economy and on oil prices if the expansion was completed on time and within budget. But the fact that the government has been the only interested buyer reveals that the project is “very risky,” says Mr. Giroux.
“There are many pension plans and pension funds who like to buy this type of infrastructure that generate income,” he explained. “From a financial point of view, the risks are significant for taxpayers, but if it happened, this project would be a relief to the oil sector of Alberta, by accelerating the opening of markets for canadian oil.”
However, if the capacity of the pipeline was not increased, the value of the project could be reduced significantly and would cost the government more than $ 2.5 billion, said Mr. Giroux.
In a decision issued last August, the federal Court of appeal overturned the project’s approval by Ottawa, in concluding that the government had not adequately consulted with First Nations, and the national energy Board had not examined the effects of the project on the marine ecosystems. Ottawa is consulting with aboriginal groups so that the Office will examine the effects on the marine environment and is expected to submit its report by 22 February.