So, it appears that the the Trudeau regime is going to be forced into some sort of Public Private Partnership (PPP) scheme in order to complete the Trans Mountain Pipeline expansion (TMX) project. According to a report in the Globe and Mail, “The Trudeau government is buying the Trans Mountain expansion project from Kinder Morgan at a cost of $4.5-billion, saying this extraordinary move is necessary to ensure this addition of oil pipeline capacity gets built … [but] … The purchase price does not include the construction costs of the Trans Mountain expansion so the final bill to Canadian taxpayers will be significantly higher once labour and materials are included. The total cost of the Kinder Morgan expansion project has been estimated at $7.5-billion … [and] … The Liberal government says it doesn’t intend to be a long-term owner of the Trans Mountain expansion project … [but this is just one step in the PPP process because] … It plans to seek a buyer. “It is not the intention of the government of Canada to be a long term owner of this project,” Mr. Morneau said … [and] … “At the appropriate time, Canada will work with investors to transfer the project and related assets to a new owner or owners,” he said … [adding that] … Ottawa will indemnify the project against financial losses from any delays thrown up by the B.C. government once a new owner is found … [and, to ice the cake] … As an added incentive for a future private-sector buyer, the Trudeau government is also promising to guarantee a rate of return for this owner if the legal battle over the expansion thwarts the project.“
As I said in the first link, PPP projects can work very well when the public puts up the money for a major infrastructure but then backs away and allows the private sector (often our pension funds and so on are major shareholders) to manage and profit from the investment.
Erin O’Toole, an Ontario Conservative Party MP, is quite correct. Justin Trudeau did, arbitrarily, block the Northern Gateway project to satisfy his green and First Nations supports; then, to satisfy a few greedy Quebecers led by Denis Coderre, he put new, phoney regulatory roadblocks up in front of the Energy East pipeline project. Then, left with only TMX he hesitated, hemmed and hawed, and tried to find a way out that would not make anyone dislike him … he failed. He failed the TMX project and he failed Canada. His government has done the only thing left … it has, effectively, nationalized the Trans Mountain Pipeline, but only after paying Texas based Kinder Morgan $4.5 Billion dollars for an asset of dubious value (after all, Kinder Morgan planned to build this pipeline at no cost to taxpayers) … it will need two things to succeed:
- A solution or solutions to the political, legal and regulatory roadblocks that greenies, British Columbia, First Nations and US interests that do not want Canadian oil to make it to tidewater will put in place to prevent the TMX from being competed; and
- Another $7.5 Billion, or more, to complete the project. That makes the total bill more like $12 Billion!
If, and it’s a Big IF, Team Trudeau can manage those two things then they should be able to sell the expanded pipeline at a profit … if.
For now, we, Canadians are ~ will be in August ~ the proud owners of a pipeline … if, another Big IF the government can solve the two problems above and find a willing Canadian buyer we might have a success story. But, remember the creation in the mid 1950s, of the Trans Canada Pipeline (TCPL) ~ it bore some striking similarities to today’s TMX situation and it brought about the electoral defeat of what may have been the most productive and, generally, trouble-free government in Canadian history. Justin Trudeau’s government will never be even remotely as effective or :trouble free” as was St Laurent’s and if “Uncle Louis” and the formidable CD Howe could not survive the TCPL debacle then I doubt that Team Trudeau can do anything but leave a mess for its successors.
Andrew Scheer needs to assure Canadians that a Conservative government will see the TMX built: Canadian oil will make it to tidewater in British Columbia no matter what obstacles the BC provincial government, some First Nations and various, shadowy, US lobby groups put in its way and the pipeline will be privatized as soon as a good business deal can be made with Canadian corporations.
Sixty years ago Louis St Laurent and C.D. Howe wanted to bring Alberta oil and gas to central Canada via a Canadian pipeline; the problem was that Canadian corporations could not raise the capital; the government, therefore, built the section through the rugged Canadian Shield and then “sold” it to Trans Canada Pipelines. Today the money can be raised but the Canadian political situation is such that no one wants to build here … that’s Justin Trudeau’s fault; he inherited a country that was “open for business,” he has rolled down the shutters, closing the store to appease various special interests.
For the moment, the Trudeau regime has, arguably, done the least wrong thing … but it painted itself into a corner with its own less than well thought through actions as it tried to curry favour with too many groups while it ignored the national interest. Canadians, all of us, will pay for this … Justin Trudeau’s Liberals should pay, too ~ at the polls in 2019 when they are consigned to the political trash heap, where they belong.