Alberta will participate in purchase, contributing up to $2 billion
Finance Minister Bill Morneau and Natural Resources Minister Jim Carr announced the Government of Canada has reached a commercial agreement with Kinder Morgan to purchase the company’s Trans Mountain Expansion Project and related pipeline and terminal assets for $4.5 billion, according to a press release.
Federal loan guarantees will ensure that construction continues through the 2018 season, until the transaction is expected to close in Aug. 2018.
“Our government believes that the commercial agreement we have reached with Kinder Morgan is the best way to protect thousands of good, well-paying jobs while delivering a solid return on investment for Canadians. This is an investment in Canada’s future,” said Bill Morneau, minister of finance.
The Government says that the investment represents a fair price for Canadians and for shareholders of the company, and the project will proceed under the ownership of a Crown corporation.
The core assets required to build the Trans Mountain Expansion Project have significant commercial value, and the transaction represents a sound investment opportunity, according to the release.
The Government says it is not its intention to be a long-term owner of this project, according to the release. At the appropriate time, Canada will work with investors to transfer the project and related assets to a new owner or owners, in a way that ensures the project’s construction and operation will proceed in a manner that protects the public interest.
“Today’s agreement will help advance Canada as an energy leader, as a place where good projects get built. This is yet another step in building an energy future with Canadians where the environment and economy go hand-in-hand,” concluded Jim Carr, minister of natural resources.
The Trudeau government will extend federal indemnity to protect any prospective new owner from costs associated with politically motivated delays.
The province of Alberta will also contribute to get the project built. Alberta’s contribution would act as an emergency fund and would only come into play if required due to unforeseen circumstances. In return, Alberta will receive value commensurate to its contribution, through equity or profit-sharing.
The Federal Government believes the project will pass any more court challenges as it consulted 117 potentially affected Indigenous rights holders for four additional months, marking the deepest federal consultations ever done on a major project.