Trudeau government to buy troubled Trans Mountain pipeline for $4.5 billion

Quebecers gathered to protest the Kinder Morgan Trans Mountain pipeline in Montreal on Sunday

Canada purchases Trans Mountain pipeline project for $4.5B

The project has been wrought with criticism from environmental groups to the British Columbia government, with BC Premier John Horgan saying he will continue fighting the expansion of the pipeline regardless of who owns the project.

Alberta's premier calls the decision by the federal government to purchase the Trans Mountain Pipeline Expansion for $4.5 billion "a major step forward for all Canadians".

Morneau presented the purchase 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.

More than 200 people have been arrested already at a Kinder Morgan facility in Burnaby, B.C. But the next protester who is arrested will be handcuffed in the name of Mr. Trudeau and his Liberals, University of B.C. political scientist Kathryn Harrison said.

Canada loses $15 billion every year on the sale of oil because the US remains its only export customer, resulting in a lower price, Trudeau argues. But if one isn't found by July 22, Kinder Morgan's stake in the pipeline would be bought out by the Canadian government, which would proceed with the expansion, whose cost has been estimated at about $5.7 billion.

Amid the feud, the pipeline has become a barometer for foreign investments in Canada, with some warning of a spillover into other sectors of the economy.

"(The expansion project) went through extraordinary reviews and was approved by the government of Canada 18 months ago", he said.

He added: "It will reassure investors that Canada is a country that respects the rule of law and gets big, important things done". Currently, he said yesterday, Canada is losing US$11.56 billion (C$15 billion) annually because of the pipeline constraint. With plans to renew construction activity this summer, the protest movement around this pipeline promises to be heated. "This is a sad day for British Columbia".

"This move sets a bad precedent and signals to other prospective investors that large projects such as pipelines can not be built by private industry in Canada", said Aaron Wudrick, federal director of the Canadian Taxpayers Federation, a right-leaning group that advocates for lower taxes.

"For years and years and years, we've had pipelines built across Canada and the United States". Indigenous groups said their concerns are being ignored.

Environmentalists jumped on the Trudeau bandwagon because the Liberal Leader had promised to respect Indigenous rights, fight climate change and end fossil-fuel subsidies.

Many activists were arrested for blocking construction on oil transport terminals in British Columbia, including May, the Green Party leader.

The Canadian pipeline industry welcomed news Tuesday that the Trans Mountain expansion pipeline is more likely to be built, but expressed grave misgivings over the federal government's decision to buy both the expansion and the existing line in order to achieve that goal.

Next, taxpayers are on the hook for the cost of twinning the project - an estimated $7.4 billion and climbing. Kinder Morgan will help Ottawa find other investors, as Morneau said the government was not interested in holding on to the asset.

"Two out of five proposed new tar sands pipelines have now been cancelled in the face of indigenous and environmental legal challenges, widespread public opposition and changing economics", Hudema said.

She also said any money the province puts in will be converted to equity in the pipeline, so there should be no negative effect on Alberta's credit rating.

Latest News