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, framing the short-term purchase agreement as financially sound and necessary to ensure a vital piece of energy infrastructure gets built.
"Make no mistake, this is an investment in Canada's future," Morneau said.
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 said he couldn't state 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.
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."
He said 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. Investors such as Indigenous groups and pension funds have already expressed interest, he said.
Until then, the 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.
A senior government official, speaking on background, said the government hopes to get a new commercial buyer for the pipeline by August, but if that doesn't happen, it will put up the $4.5 billion to purchase the assets.
The government won't publicly discuss construction cost for the expansion because it wants private companies to carry out their own assessments, then bid on the project, the official said.
