Trans Mountain, a Financial Loss?

Trans Mountain

The controversial Trans Mountain pipeline system in western Canada will not be cost-effective for the Canadian government, according to a new report on the financial value of the project released Wednesday by the Parliamentary Budget Officer (PBO).

“The government’s 2018 decision to acquire, expand, operate and then divest the assets of the Trans Mountain pipeline system will result in a net loss to the federal government,” concluded the PBO, which is mandated to provide independent economic and financial analysis for Canadian parliamentarians.

Trans Mountain causes an outcry

Long sought by Alberta’s oil industry but opposed by environmentalists and aboriginal communities in neighbouring British Columbia, the expansion of the Trans Mountain pipeline has caused an uproar in recent years.

The project involves doubling the pipeline’s line to triple the capacity to transport oil from the Alberta oil sands to the Pacific coast for export, to serve markets in Asia and elsewhere.

Convinced of the “national interest” of this project, which was first proposed by the private sector, Justin Trudeau’s government bought it four years ago for 4.4 billion Canadian dollars, causing an outcry from environmental groups.

Towards a cancellation of the project?

But due to “increased construction costs and a delayed in-service date” for the pipeline, Trans Mountain now has an estimated value of $3.9 billion, according to this new PBO report. Back in February, the state-owned Trans Mountain announced that the cost of expanding the pipeline through the Rockies had soared by 70%, from 12.6 billion Canadian dollars to 21.4 billion (15.64 billion euros).

In his report, the Parliamentary Budget Officer mentions the possibility of cancelling the project, although work has already begun. “In such a scenario, the government would have to write off assets worth more than $14 billion,” it says, which would “result in significant financial losses” to the Canadian government.

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