Among other things, May wants to know why Ottawa handed Kinder Morgan $4.4 billion for an asset the Parliamentary Budget Office values at just $2.8 billion.
Buying an old (67 years old) and leaky pipeline in order to take over a private sector project that had hit the rocks was hardly smart. But overpaying for it to the extent that the Liberals did was an act of political desperation.
The news coverage downplays the reality that Ian Anderson, CEO of Trans Mountain Corp., the Crown corporation in charge of the project, happens to be the former president of Kinder Morgan Canada. Trans Mountain’s parent, Canada Development Investment Corporation, bought Kinder Morgan’s assets with a $5.2 billion loan from Export Development Corporation. This was considered a “non-budgetary transaction.” As such, it did not need to be a line item in Finance Minister Bill Morneau’s budget. Nor did it need to be debated or voted by Parliament.May says the signs were obvious that Kinder Morgan had no interest in building the new pipeline.
Instead of heeding those signs, the Liberals paid a price exceeding the old pipeline’s value in order to take on a project that Kinder Morgan had clearly decided would not fly.
The Liberals wanted more than anything to prove they could get the pipeline built. One can only imagine the glee of the Texas oil men when they realized they could sell the old pipeline for nearly twice what it was worth.
When Kinder Morgan kidnapped its own project to demand a guarantee — or else — they were not looking for ransom. They wanted to shoot the hostage. Being able to blame a third party when they abandoned the project could avoid penalties under long-term contracts Kinder Morgan had signed.
But the reckless behaviour with public funds does not end with the announcement in May 2018 that the Government of Canada was buying the pipeline for $4.4 billion.
On Aug. 30, 2018, the Federal Court of Appeal struck down the pipeline permits ruling that not only did the Liberal government violate Indigenous rights leading to the quashing of the permit, Kinder Morgan itself violated indigenous rights. In other words, the vendor contributed to the devaluing of the asset, and we should never have paid $4.4 billion without re-negotiating the price.
Yet, without any explanation, Finance Minister Bill Morneau cut a cheque for $4.4 billion to Kinder Morgan the very next day, Aug. 31, with no closing date for purchase and sale of the pipeline.
We overpaid not once, but twice.
What is most galling to me is that our public funds are being used to brow-beat First Nations along the route into signing benefit agreements. One elected council member of a First Nation that is fighting the project told me recently that they are being “bombarded” by the now government-owned Trans Mountain with offers of millions of dollars to agree to the project.
Those are public dollars being used to coerce acceptance of a project most Indigenous nations do not want to accept. And yet every time a First Nation accepts a benefit agreement, politicians celebrate it claiming Indigenous people want the project. That is the case in some instances, but it seems like the latest form of oppression and colonialism: Refuse to listen to Indigenous objections, convince people the project is inevitable and use our money to bribe and coerce.The Big Lie.
The Trans Mountain pipeline remains a project outside market forces. The arguments for it rest on misconceptions and propaganda. It will not get a higher price at “tidewater.” Bitumen is inevitably expensive to produce with low value in the marketplace. As the carbon bubble bursts, these expensive “assets” will be the first to be stranded — uneconomical and unusable. Pursuing it blows our Paris commitments while squandering public funds.
It is not too late to ask the question: what could be done with the further $13 billion? Could we not do more for the Alberta economy in cleaning up toxic abandoned wells and mines, as well as tailings ponds in northern Alberta? Could we not fund green and renewable energy? Ensure clean drinking water for every First Nation? Ensure we have an electricity grid to move 100% renewable energy from province to province?
How much is too much? In my view, a single penny more is too much.The government has a lot of explaining to do. Why did it so grossly overpay the Boys from Enron for a pipeline they were desperate to unload? Why did it manipulate the pipeline approval process, calling senior public servants into a room and telling them to endorse it? Why has the government never produced "the science" it claims to have showing dilbit to be safe? Where are these eager Asian markets for bitumen, markets willing to pay vastly more than world oil price for our high-carbon, hard-to-process, low-value sludge? How will the end use of these high-carbon products impact the climate and our hopes of averting climate catastrophe? What is plan B if bitumen becomes a "stranded asset"? When and how are they going to clean up the ticking time bomb of the Athabasca Tar Sands tailing ponds that threaten to turn the Mackenzie River watershed into a giant Love Canal?
When will they come clean to the Canadian people?