Troubled Canada pipeline no longer profitable: budget watchdog

Troubled Canada pipeline no longer profitable: budget watchdog

The Trans Mountain pipeline, whose pieces are seen here at a storage lot in Abbotsford, Canada in June 2021 waiting to be assembled, is no longer profitable, the office of the Parliamentary Budget Officer concluded in a report
The Trans Mountain pipeline, whose pieces are seen here at a storage lot in Abbotsford, Canada in June 2021 waiting to be assembled, is no longer profitable, the office of the Parliamentary Budget Officer concluded in a report. Photo: Cole Burston / AFP/File
Source: AFP

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The controversial Trans Mountain pipeline expansion project, now under construction in western Canada after being nationalized, is no longer profitable as costs have spiralled, Parliament's budget watchdog said Wednesday.

In a report, the office of the Parliamentary Budget Officer said a review of the project's finances found "that the government's 2018 decision to acquire, expand, operate, and eventually divest of the Trans Mountain assets will result in a net loss for the federal government."

Ottawa purchased the pipeline for Can$4.4 billion (US$3.4 billion) from Kinder Morgan four years ago to salvage the troubled expansion project.

But its current value, the PBO estimated, is only Can$3.9 billion, after construction costs soared to $21.4 billion and its completion was pushed one year to late 2023.

The negative valuation is based on the pipeline's future cash flows over 40 years, minus construction costs.

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The project is to replace an aging conduit built in 1953 to deliver 890,000 barrels of oil a day from landlocked Alberta to the Pacific coast for shipping to new markets in Asia and elsewhere.

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Prior to the government taking over the project, it had been stalled by legal challenges and protests by Indigenous groups and environmental activists.

Source: AFP

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