The deal includes all of Kinder Morgan Canada’s core assets. The purchase ensures that the Trans Mountain pipeline, which carries oil from Alberta to the west coast of British Columbia will begin a planned expansion this summer.
According to CBC News, Finance Minister Bill Morneau announced details of the agreement reached with Kinder Morgan at a news conference with Natural Resources Minister Jim Carr this morning.
Morneau said the project is in the national interest, and proceeding with it will preserve jobs, reassure investors and get resources to world markets. He could not say exactly what additional costs will be incurred by the Canadian public to build the expansion, but suggested a toll paid by oil companies could offset some costs and that there would be a financial return on the investment.
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.
Kinder Morgan had estimated the cost of building the expansion would be $7.4 billion, but Morneau insisted that the project will not have a fiscal impact, or “hit.”
Alberta will also provide emergency funding to cover unforeseen costs.
The government does not intend to be a long-term owner, and at the appropriate time, the government will work with investors to transfer the project and related assets to a new owner or owners.
However, Kinder Morgan will be paid regardless of whether a new suitor is found.
Until then, the pipeline project will proceed under the ownership of a Crown corporation.
The agreement, which must still be approved by Kinder Morgan’s shareholders, is expected to close in August.