OTTAWA/WINNIPEG (Reuters) - Canada will buy Kinder Morgan Canada Ltd’s (KML.TO) Trans Mountain pipeline for C$4.5 billion ($3.5 billion), the government said on Tuesday, hoping to save a project that faces formidable political and environmental opposition.
Finance Minister Bill Morneau said purchasing the pipeline was the only way to ensure that a planned expansion could proceed. The pipeline, running from Edmonton, Alberta, with its nearby oil sands, to Burnaby, British Columbia, would allow Canadian crude to gain greater access to foreign markets and higher prices.
Kinder Morgan Canada gave Ottawa until May 31 to come up with reassurances it could press ahead with plans to more than double the capacity of the existing pipeline amid efforts by the province of British Columbia to block construction.
“When we are faced with an exceptional situation that puts jobs at risk, that puts our international reputation on the line, our government is prepared to take action,” Morneau told reporters.
He said the pipeline purchase provided the federal jurisdiction needed to overcome British Columbia’s opposition, but did not say how it could force the province to allow construction.
Although Ottawa has taken stakes in struggling energy projects, Tuesday’s announcement marked the first time Ottawa has bought an entire pipeline. It does not intend to own the project for long.
The move drew immediate criticism from both sides of the political spectrum, and could hurt Prime Minister Justin Trudeau’s popularity in the key British Columbia battleground in a 2019 federal election.
The decision represents “a massive, unnecessary financial burden on Canadian taxpayers,” Canadian Taxpayers Federation Federal Director
