Trans Mountain pipeline to result in net loss for Ottawa, PBO says

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The national authorities present stands to suffer wealth from its concern successful the Trans Mountain pipeline, according to a caller study from the Parliamentary Budget Officer.

The latest analysis, released Wednesday, shows the nett contiguous worth of the pipeline is antagonistic $600 million, leaving it worthy astir $1.2 cardinal little than the PBO’s estimation successful December 2020.

The caller fiscal investigation takes into relationship caller developments specified arsenic the fund overruns disclosed successful February that peg the existent outgo of the Trans Mountain enlargement astatine $21.4 billion, a 70 per cent summation from an earlier estimation of $12.6 billion.

The caller PBO study besides reflects the information that the pipeline’s projected completion day has been pushed backmost to the 3rd 4th of 2023.

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The 1,150-km Trans Mountain pipeline carries 300,000 barrels of lipid per day, and is Canada’s lone pipeline strategy transporting lipid from Alberta to the West Coast.

Its expansion, for which operation is presently underway, volition fundamentally duplicate the existing pipeline, raising regular output to 890,000 barrels to enactment Canadian crude lipid accumulation maturation and guarantee entree to planetary vigor markets.

The Trans Mountain task was bought by the national authorities for $4.5 cardinal successful 2018, aft erstwhile proprietor Kinder Morgan Canada Inc. threatened to scrap the pipeline’s planned enlargement task successful the look of environmentalist opposition.

On Wednesday, Adrienne Vaupshas – property caput for national Finance Minister Chrystia Freeland – said autarkic analyses from some BMO Capital Markets and TD Securities person recovered that the Trans Mountain pipeline task remains commercially viable.

“The Trans Mountain Expansion Project is successful the nationalist involvement and volition marque Canada and the Canadian system much sovereign and much resilient,” Vaupshas said successful an email, adding the national authorities inactive plans to motorboat a divestment process aft the task is further derisked and aft negotiations with Indigenous groups person progressed.

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A fig of Indigenous-led initiatives person antecedently stated their intentions to prosecute an equity involvement successful the pipeline.

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Environmental groups were speedy to constituent to the PBO’s study Wednesday arsenic impervious that the national authorities should ne'er person purchased Trans Mountain successful the archetypal place.

“The national authorities is losing wealth connected the pipeline whose profits they promised would wage for greenish energy,” said Keith Stewart, elder vigor strategist for Greenpeace Canada.

“Rather than pouring billions much into a money-losing, climate-destroying pipeline that lone benefits lipid institution bottommost lines, let’s walk it straight connected greenish vigor solutions that assistance Canadians debar symptom astatine the pump portion warring clime change.”

In its report, the PBO besides looked astatine what would hap if the national authorities were to halt operation this period and cancel the Trans Mountain task indefinitely, suggesting that specified a determination would necessitate the authorities to constitute disconnected implicit $14 cardinal successful assets.

There has been nary denotation that the Trudeau authorities has immoderate volition of cancelling the pipeline project.

In February, Freeland said Trans Mountain Corp. – a national Crown corp – volition request to unafraid third-party backing to implicit the project, either done banks oregon nationalist indebtedness markets.

However, the national authorities has agreed to motion a $10-billion indebtedness warrant for the project.

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Part of the crushed wherefore the worth of Trans Mountain is declining arsenic the task costs soar is owed to the mode lipid companies wage for the usage of the pipeline done tolling arrangements.

Due to Trans Mountain’s existing semipermanent contractual agreements with lipid shippers, lone 20 to 25 per cent of the accrued superior costs of the task tin beryllium passed connected to lipid companies successful the signifier of accrued tolls.

That means that astir $7 cardinal successful outgo overruns indispensable beryllium absorbed by Trans Mountain itself, yet eroding the project’s returns.

© 2022 The Canadian Press

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