Kinder Morgan held a pop-gun to Canada’s head and we blinked.
The news this week that Ottawa will cough up billions of dollars to get the Trans Mountain pipeline built has actually made it in the national interest. And let’s make one thing clear … the $4.5 billion touted by Ottawa, is the cost of purchasing the existing infrastructure. The cost of construction will be added onto that bringing the cost more likely around $12 billion. Economist Robyn Allan, who includes the enhanced Oceans Protection Plan and a few other goodies, pegs the actual cost to taxpayers at around $20 billion.
You have to hand it to the feds, they drafted up a plan that angered those who don’t want the pipeline and those that do. Someone must have told them that if they anger both sides in an argument they must be doing the right thing. Not quite so in this case.
The socialist in me, though, says buying the pipeline might not be such a bad plan because once built, pipelines are pretty much a licence to print money. Companies like Kinder Morgan and Enbridge don’t seem to be on the brink of bankruptcy. Ottawa can have a direct pipeline in to all that Alberta oil money it’s wanted since P.E.T was in power. If Prime Minister Justin Trudeau even hinted that any profits from this venture would directly go towards carbon reduction, it might be an easier sell. That, of course, hasn’t happened because everyone knows that is going to be a money pit bigger than an oilsands drill site.
On the upside, this likely negates Alberta’s un-Canadian Bill 12, which allows it to regulate the amount of oil and gas it sends to B.C. (The irony, of course, is that B.C. is seeking a legal determination on whether it can determine how much oil and gas rolls through this province and is pegged as the bad guy.)
I would suspect that Bill 12 is now moot because how can a province regulate a federal project? Gee, maybe they’ll go to court for an answer.
Finance Minister Bill Morneau said loan guarantees will allow construction of the project this summer. Someone should tell Morneau that Kinder Morgan still has to apply for 435 permits of the 1,191 needed. Better get cracking. Or does the national interest now supersede pesky little items like permits.
And then there’s the 157 conditions that the National Energy Board put on the project … have those been met or, now that Ottawa owns the pipeline and runs the NEB, can we just wave a legislative hand and be done with them? Nah, no conflict of interest there.
The real bothersome aspects of this deal, and the one they offered Kinder Morgan previously, is the indemnity clauses. Ottawa says it only wants to be in the pipeline and/or pipeline building business for a short time. Fair enough. But whoever they sell it to (your pension plan?) will be indemnified against pretty much everything. Nice gig if you can get it.
The Government of Canada will “indemnify the proponent for additional costs caused by the discriminatory and unjustified actions of a province or municipality in an attempt to delay or obstruct the expansion.”
Isn’t Alberta’s Bill 12 a “discriminatory and unjustified action of a province?” So we shouldn’t worry about Alberta Premier Rachel Notley shutting off the taps, there’s definitely a case to be made there that British Columbia should be indemnified.
But that’s not even the worst of it.
The Government of Canada will also compensate the proponent if a “final adverse judicial decision is made in respect of the federal jurisdiction over the Expansion that would have a catastrophic impact on the Expansion.” In other words, if B.C. wins its reference case.
Or, more mind-bogglingly, the Government of Canada will compensate a new owner even if the Supreme Court of Canada rules that the project should not proceed. How’s that for democracy and adhering to the rule of law, which everyone seems to like to bandy about when discussing this?
I have to chuckle at all the pundits who worry about what this decision to Canada’s reputation as a place for investors to park their money … the underlying worry, of course, is that investors might look elsewhere. I don’t think so. They’re probably now looking at Canada as place where they can play hardball, we’ll cave, and they can walk away with billions.
So what happens if the Province of B.C. puts a bid in on purchasing the pipeline’s assets? Just asking.