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.