The federal government overpaid for the Trans Mountain pipeline by as much as $1 billion, according to a new government report.
Nearly a year after the federal government bought the Trans Mountain pipeline project from Kinder Morgan for $4.5 billion, Parliamentary Budget Officer (PBO) Yves Giroux wrote that the project is worth significantly less than what the government paid.
The PBO also criticized the government for not negotiating on the price.
“If it was a car, we would say they paid sticker price, they didn’t negotiate very much, they didn’t get that many deals or manufacturers rebates — quite the opposite,” he said.
The $4.5 billion does not include construction costs, which could run as high as $9.3 billion.
Led by the NDP-Green government in British Columbia, environmentalists have been launching legal challenges against the pipeline project in an effort to landlock Alberta resources and keep Canadian oil in the ground.
In May of 2018, the Federal Court of Appeals overturned Ottawa’s approval for Trans Mountain — leading to fears Kinder Morgan would cancel the project.
Despite creating laws which prevent pipeline development and the Prime Minister’s goal to “phase out the oilsands,” the government made an offer to buy the pipeline for $4.5 billion.
Construction has yet to begin — its future still being fought over in the courts.
Delays are only expected to further diminish the value of the nationalized project.
According to the PBO, Trans Mountain could lose as much as $700 million in value if delayed by
another year. If cancelled, the current pipeline infrastructure is only worth $2 billion.
The PBO believes that “all indicators point that there will be a delay in construction.”
Conservative Natural Resources Critic Shannon Stubbs slammed the government for accepting such a bad deal.
“Not only did the Liberals spend $4.4 billion of taxpayers’ money to purchase a pipeline that a private company was willing to build without a single tax dollar, they failed in their negotiations, spending a billion more than what the independent Parliamentary Budget Officer estimated it was worth,” said Stubbs.
The National Energy Board will be presenting a new report on the status of the project on February 22.