‘Take your time’: Trans Mountain CEO says Ottawa shouldn’t rush to sell pipeline
Trans Mountain’s new CEO says the federal government shouldn’t rush to sell the newly twinned $34 billion pipeline.
“What the government needs to be here is a disciplined seller. Full stop. And a disciplined seller does the following things — you do not act in a hurry, you take your time,” said Trans Mountain CEO Mark Maki.
Appearing in Ottawa before MPs on the Natural Resources parliamentary committee, Maki said there are several sources of uncertainty that “capital markets” need to see settled before they give taxpayers a fair price for the pipeline.
For instance, Maki said, the federal government still needs to clarify for investors what Indigenous economic participation in the pipeline will look like. Maki later told journalists that buyers will need to know how large a stake Indigenous communities might acquire and how they might participate in the company’s governance.
Last summer, Ottawa sent a letter to First Nations and Métis governments explaining how eligible Indigenous groups along the pipeline route would be able to acquire ownership stakes and be supported through access to capital. The federal government is reportedly still consulting with those governments.
Meanwhile, the Canada Energy Regulator has yet to decide whether Trans Mountain can charge higher tolls to shippers to recoup construction cost overruns. Until a decision is made, the pipeline’s long-term revenues remain uncertain.
“Having the rate case behind you will help with the certainty of what the revenue in the system is going to be,” Maki said, warning that it could be several years before the toll matter is settled..
The Trans Mountain pipeline carries crude from Alberta to the B.C. coast. After four years and $34 billion spent, the expansion opened on May 1, tripling the capacity of the existing pipeline and adding an additional 590,000 barrels per day of shipping capability.
Although Finance Canada oversees the sale of the asset, Maki’s comments suggest the government could have reasons to hang on to the pipeline for now.
They also suggest a sale might not happen until after the next federal election, eliminating the project as a point of political vulnerability for Prime Minister Justin Trudeau, who continues to run on the Liberal Party’s plan for reducing carbon emissions.
Bloomberg has reported that Canada is poised to delay the sale of Trans Mountain until after the 2025 election.
In a statement, spokesperson for the finance minister Katherine Cuplinskas said the federal government will launch a divestment process “in due course.”
Canadians are on the hook for more than $34 billion for the Trans Mountain pipeline expansion project after the federal government was forced to step in and buy it in 2018. CBC’s Lyndsay Duncombe breaks down why the project went over budget and how taxpayers can get their money back.
Ottawa bought Trans Mountain from Kinder Morgan for $4.5 billion in 2018. The expansion project, which began in earnest in 2019, was plagued by delays, regulatory hurdles and soaring construction costs.
Critics and financial analysts have said they expect the Canadian government to sell the pipeline at a discount and take a loss. Maki told MPs he doesn’t believe that will happen if the government remains patient.
“Let’s go to my conviction about this,” he said. “I think if we are disciplined sellers … we can get our capital back.”
Trans Mountain often cites its own economic analysis, which indicates the expansion contributed an estimated $26.3 billion to Canada’s GDP from 2018 to 2030.
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