Federal government to buy Trans Mountain pipeline for $4.5B

Canada purchases Trans Mountain pipeline project for $4.5B

Canada purchases Trans Mountain pipeline project for $4.5B

"We are left questioning why any company would pursue large capital investment in Canada", said a note to clients by GMP Securities analysts.

The B.C. government is carrying on with its reference case against the Trans Mountain pipeline expansion, Premier John Horgan told Prime Minister Justin Trudeau in an early-morning phone call Tuesday.

The purchase, for 4.5 billion Canadian dollars, ensures that the Trans Mountain pipeline, which carries oil from Alberta to a port in a suburb of Vancouver, British Columbia, will begin a planned expansion this summer. "Kinder Morgan cut creative deals with lenders and oil producers to shield itself from massive write-downs like the ones taken recently by rivals TransCanada Corp and Enbridge Inc in canceling controversial pipeline projects", Reuters wrote.

"Despite tens of thousands of people opposing it, he just used taxpayer money to bailout a project that communities don't want, that would break his own climate commitments, and that Indigenous peoples are fighting from the frontlines to the courtrooms", Thomas-Muller added.

Canada on Tuesday agreed to buy the pipeline for $4.5 billion (US$3.5 billion) in an effort to save a project that faces formidable opposition from environmentalists and British Columbia officials anxious the pipeline could spill its heavy oil.

While Prime Minister Justin Trudeau and Alberta Premier Rachel Notley have been adamant that the project is good for the entire country, B.C. Premier Joe Horgan and indigenous groups in B.C. have been opposed to the project for months. To do so, Canada will pay the pipeline's current owner, Kinder Morgan, $4.5 billion in Canadian dollars - about $3.5 billion in US currency.

The conclusion was that this was a fair price - a fair price for the Government of Canada and taxpayers and a fair price for the shareholders. "We're going to stand with our bodies as our weapons to defend the last of our sacred lands from any type of further encroachment or invasion", Manuel says.

The issue has divided two Canadian provinces, pitting Alberta's government against leaders in British Columbia.

According to the Pipeline Safety Act, $1 billion in financial assurances for the existing pipeline was in place based on a $500-million parental guarantee from Kinder Morgan. But the government needs to reduce the risks before those investors emerge.

"This deal - and this pipeline - will unlock investment in our oilsands because we're now on the path to getting full value for our energy resources". A new Crown corporation will be created to manage the project. After it completes the project, Canada plans to sell the pipeline.

Many activists were arrested for blocking construction on oil transport terminals in British Columbia, including May, the Green Party leader.

Asked about the ongoing opposition, Minister of Indigenous Services Jane Philpott said that Ottawa will ensure it is "fully respectful" of the rights of Indigenous Peoples.

"CEPA is deeply concerned that the government needed to purchase the project for it to be built and to assert federal jurisdiction".

The Canadian government said that it does not intend to "be a long term owner of this project", noting it plans to work with investors to transfer the project to a new owner.

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