Feds paid top dollar for Trans Mountain pipeline, spending watchdog says

OTTAWA – Canada’s parliamentary budget watchdog has said the Liberal government paid the “sticker price” when it bought the Trans Mountain pipeline from Kinder Morgan for $4.5 billion.

Parliamentary Budget Officer Yves Giroux estimates the Trans Mountain pipeline and planned expansion project is worth between $3.6 billion and $4.6 billion.

This means the government’s purchase price of $4.5 billion was on the high end of the project’s total calculated value.

Giroux also estimates expanding the pipeline’s capacity will cost $9.3 billion if the project is completed by Dec. 31, 2021.

He warns any construction delays or increases in costs would reduce the value of the project and its resale value, meaning the government could have overpaid for the pipeline.

The Canadian Taxpayers Federation said it was never on board with the purchase.

Aaron Wudrick with the CTF certainly isn’t surprised that the feds paid a premium for this pipeline project.

“I don’t think that the Trudeau Government is to blame for all of the reasons why this pipeline was running into trouble, but they are to blame for some of them.”

Including what Wudrick describes as desperation from the federal government heading into the negotiations with Kinder Morgan.

He identifies the cancellation of the Northern Gateway Project and the abandonment of the Energy East pipeline as factors in forcing the government to fight tooth and nail for the Trans Mountain project.

“I think anybody knows that if you go into a negotiation signalling you are desperate to buy, the party you’re negotiating with is going to be able to name their price. I think that’s what happened here.”

He argues the next step for Ottawa should be to build the pipeline expansion as quickly as possible and try to get something back for it.

“Seven hundred million dollars per year of delay is very significant for a project that is measured in billions (of dollars). A 10 per cent rise in construction cost and a $450 million reduction in value, these are not small numbers.”

The federal government bought the pipeline from Kinder Morgan in August after political opposition to expanding the pipeline between Alberta and the B.C. coast gave the company and its investors cold feet.

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