Canadian Federal Government offers to cover losses on Trans Mountain project

Finance Minister Bill Morneau has reportedly said that the Canadian Federal Government will cover any financial risks for the planned C$7.4bn ($5.8bn) Trans Mountain pipeline expansion project carried out by Kinder Morgan.

The project seeks to increase the capacity of oil transported from Alberta to British Columbia from 300,000 barrels per day (bpd) to 890,000bpd.

Morneau was quoted by media sources as saying: “If Kinder Morgan isn’t interested in building the project we think plenty of investors would be interested in taking on this project, especially knowing that the federal government believes it is in the best interest of Canadians and is willing to provide indemnity to make sure that it gets done.”

Kinder Morgan recently decided to stop spending on all non-essential activities related to the project, citing political and legal risks. This included opposition from the British Columbia (BC) Government.

Last month, Kinder Morgan issued an ultimatum claiming that the project would only be continued if the federal government resolved all legal and jurisdictional issues by 31 May this year. The federal government is currently holding negotiations with Kinder Morgan to make sure the project is built.

The Trans Mountain pipeline expansion has been a topic of dispute between provincial governments, particularly Alberta and BC.

Last month, the Alberta Government introduced the Preserving Canada’s Economic Prosperity Act, which is intended to curb the export of natural gas, crude oil and refined fuels to BC.