Financing costs, write-downs and construction delays were to blame for a low return as taxpayers only made $40 million on the Trans Mountain Pipeline after the Liberals spent $4.5 billion to buy it, says Blacklock’s Reporter.
“In its first 28 months of public ownership, the Canada Development Investment Corporation-owned Trans Mountain Corp. entities reported a total net income of $40 million,” the Parliamentary Budget Office said in a report.
The $40 million represented a 4% return on $1.045 billion in revenues from pipeline tolls.
“The Canadian approach will be to ensure that we make a profit,” then-Finance Minister Bill Morneau said in 2020 testimony at the Commons Finance Committee.
“So, that’s where we’re at on that. We believe this is the right thing for us to do, to deal with a political challenge. It continues to be of benefit to all Canadians.”
The pipeline refit is due for completion in 2022.
Morneau said the pipeline was commercially viable, but would not forecast when taxpayers could expect a return of billions spent on Trans Mountain.
“There are always things we can’t necessarily predict,” Morneau earlier told reporters.
Asked if costs would climb higher, Morneau replied: “There’s always things they can’t necessarily predict.
“What is the limit the federal government is willing to put public funds into the project?” asked New Democrat MP Peter Julian (New Westminster-Burnaby, B.C.). “Is it $20 billion? Is $25 billion, or is the sky the limit?”
“The Canadian approach will be to ensure that we make a profit,” replied Morneau.
The finance department hired auditors on December 23 to complete an “independent financial analysis” of the pipeline.
The department budgeted a total $17.7 billion to buy the line and expand it from Edmonton to Burnaby, B.C.
“Wherever feasible the department is taking steps to increase transparency,” wrote staff.
However results of its independent review will not be released publicly. A report is due September 1.
Cabinet bought the Kinder Morgan pipeline on May 29, 2018 though a legal challenge of the project’s expansion was pending in the Federal Court of Appeal. The Court three months later on August 31 ordered a halt to construction due to First Nations protests, resulting in cost overruns.
“Costs tend to go up over time,” Evelyn Dancey, associate assistant deputy minister of finance, testified at a February 3, 2020 hearing of the Commons finance committee.
“I would not be surprised if that’s the direction based on the delays and so on.”
Dave Naylor is the News Editor of the Western Standard