Canada to buy major pipeline to ensure it gets built

Canada to buy major pipeline to ensure it gets built

Federal Finance Minister Bill Morneau announced today that the Canadian Government is spending $4.5 billion to buy all the assets from the project, and has also guaranteed financing for the company to start construction immediately.

"It's not the intention of the government of Canada to be a long-term owner of the project", Morneau said, adding that pension funds and indigenous groups have already expressed an interest in buying stakes in the project.

The announcement was made by Canada's finance minister, Bill Morneau, who called the proposed purchase "an investment in Canada's future".

Kinder Morgan last month gave Ottawa an ultimatum: Chairman Steve Kean said the company would suspend all work on the expansion project entirely if the legal issues surrounding it can not be resolved by May 31, adding that it would not continue risking shareholder funds on the project unless the clouds over it clear. He described the $4.5 billion buy-out as a "fair price for Canadians", and said the commercial agreement is a "sound investment opportunity".

The purchase will be financed by Export Development Canada and includes; the pipeline, pumping stations, the marine terminal in Burnaby, B.C. and rights of way along the pipeline between Edmonton and Vancouver.

He pointed to B.C. premier John Horgan's comments on the project as well as what he says is a lack of a construction plan.

In 2016, the B.C. provincial government said that it did not support the pipeline because Kinder Morgan did not provide a plans for oil spill prevention and clean up efforts.

With files from the Canadian Press.

He said it threatens Canada's reputation as a safe place to invest, puts thousands of jobs at risk and holds back Canada's economic growth. "It will help us build up the things that matter to working families, such as our schools and our hospitals".

Notley says there is more certainty around the project than there has ever been and she doesn't plan to use her province's legislation to regulate the flow of oil exports for now.

The government will also offer federal loan guarantees to ensure construction of the expansion continues through the 2018 season as part of the deal with the company, a unit of Houston-based Kinder Morgan Inc (KMI.N).

Kamloops-South Thompson MLA Todd Stone said "bravo to Premier Horgan for taking a $7.4-million project that will create 15,000 jobs that would be built by a private proponent and now it's nationalization of a multi-billion dollar asset". Again, all of this makes good financial sense for Canada but it's a bit surprising that Justin Trudeau is willing to directly challenge the environmental left to make this happen.

One man said he thought the project would be profitable for Canada.

A celebratory Notley told reporters the province's share would only be paid once the project is completed and oil is flowing, with Alberta receiving an equity share in the project in return. If Alberta simply upgraded what it sent through the Trans Mountain pipeline into oil, the existing pipeline's capacity, as well as that of all other pipelines that service the oil sands, could be boosted by a third.

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