Kinder Morgan Canada says expanding the Trans Mountain pipeline could cost the federal government upwards of $9.3 billion, and as much as $1.9 billion beyond the company’s original construction estimate, while taking a year longer to complete.
Canadian Press reports that the figures are included in documents the company filed on Aug. 7 with the United States Security and Exchange Commission (SEC) related to its plan to sell the pipeline to the Canadian government for $4.5 billion.
The sale price does not include how much more Canadians will pay to finish twinning the pipeline between Alberta and British Columbia. Finance Minister Bill Morneau has declined to say how much Ottawa expects to spend on construction because he fears that would affect negotiations with construction contractors which are now underway, the published report says.
Kinder Morgan originally reported an anticipated $7.4 billion construction cost in February 2017 but this number hasn’t been updated since the project hit political snags, construction delays and public opposition in British Columbia.
However, the company updated its numbers in preparation for an Aug. 30 shareholder vote on the sale in Calgary.
In its filing, the company outlines various construction cost models as part of its fairness evaluation of the Canadian government’s offer. The most expensive option brings the total costs to $9.3 billion, with a December 2021 completion date, a year later than the current timetable.
The government asserts the figure is not an official cost figure. However Robyn Allan, an independent economist and former CEO of the Insurance Corporation of British Columbia, said in the published report that Kinder Morgan wouldn’t evaluate the fairness of the sale based on numbers that have no bearing on reality.
Allan indicted she thinks the final cost will be much higher than $9.3 billion.
She said the only detailed information Canadians have about the particulars of the sale is due to investor laws in the United States and Canada that require Kinder Morgan to file documents outlining the specifics of the deal. Since taxpayers are the shareholders of the project now, she said Canadians deserve the same level of disclosure from Ottawa and they aren’t getting it.
An official in Morneau’s official said as soon as construction contracts are in place the government will freely release an official cost update, which he said should happen no later than next winter.
The initial goal to finalize the sale in August has been delayed until September or October pending the Aug. 30 shareholder vote results, the published report says.