​Trans Mountain posts $36 million loss to date

The Trans Mountain pipeline posted a $36 million net loss for the federal government in the first seven months that it owned the pipeline, according to the Parliamentary Budget Officer.

A big chunk of that loss is attributable to $87 million in financing – i.e. interest on the debt the government incurred to buy the pipeline from Kinder Morgan Canada.

Were it not for the interest payments on the debt, the pipeline would have generated $36 million in profits over the seven-month period examined by the PBO.

The federal government bought the existing Trans Mountain pipeline and the Trans Mountain Expansion Project in 2018 for $4.4 billion, of which $1.1 billion was for money already spent or committed to the expansion before it was halted by the courts.

To make the acquisition, the federal government borrowed $5 billion, at an interest rate of 4.7%.

In the first seven months that the government owned the pipeline, it generated $229 million in operating revenue, according to a PBO analysis of the financial reporting by the Canadian Investment Development Corp., the Crown corporation now responsible for the pipeline assets.

The operating expenses for the pipeline totalled $132 million, and depletion and depreciation costs were $61 million. Financing costs (interest payments on debt) was $87 million.

As a number of observers have pointed out, the only real value for the federal government in buying the pipeline lies in its expansion. In a 2018 financial statement, Kinder Morgan Canada estimated the expanded pipeline would generate $900 million in revenue annually.

If, for some reason, the twinning project – estimated to cost between $7.4 billion to $9.4 billion – was never completed, the government would need to write off about $2 billion. That includes money already spent on the expansion and good will payments.

— Business in Vancouver

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.