James Alexander Michie: The federal government will possibly become the official owner of Trans Mountain | CBC News
Author: James Alexander Michie
Because the Trans Mountain pipeline could not secure a new buyer from the private sector before the July 22 deadline, the federal government will become the official owner of the pipeline expansion.
The purchase price stipulated by the government in May was $ 4.5 billion, which does not cover the costs involved in the construction of the new pipeline. To reach this goal, according to previous estimates, it would require at least $ 7.4 billion. therefore, finding another buyer for the said project before the deadline was a challenge and, together with this, another influential factor is the risks involved in the project.
Kinder Morgan is expected to accept the offer from Ottawa valued at $ 4.5 billion between the months of August and September, if this agreement is made, Morgan will receive a capital gain of $ 2.7 billion in the sale.
Likewise, the contract stipulates that Morgan expects to pay not less than $ 300 million in both provincial and federal taxes on that capital gain, likewise, it is estimated that this number will approach $ 325 million considering the estimated taxes that will be paid, being the “net price” of Trans Mountain of $ 4.175 billion.
On the other hand, Ottawa’s plan is to purchase the gas pipeline as financially consistent and necessary to ensure that a significant portion of the energy infrastructure is built, in addition to which the government also insists that it is not in its plans to own and operate the gas pipeline. In the long term, in fact, according to the government, there are numerous groups that could be interested in buying the project, as well as pension funds and indigenous groups, since they ensure that working together with the investors so that later it is achieved Transfer the project to a new owner as long as it is the right time.
According to Richard Masson who is an expert in energy project development and an executive member of the School of Public Policy at the University of Calgary, it is possible that the government’s membership will be constituted through a holding company with Ottawa as the main shareholder, which would allow the federal government to sell the company to another buyer or if in that case no other buyer arises, an initial public offering could be made and likewise start with the sale of shares of that company to the Canadians converting it into a company that is quoted in In fact, it says that there are many examples of companies that are almost public and that were likewise privatized successfully.
Source: Brennan MacDonald, Vassy Kapelos | CBC News
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