Trans Mountain Corporation CEO Mark Maki said the Trans Mountain pipeline expansion was “worth the cost” in a Monday appearance in Ottawa, even with the inflated price tag of $34 billion.
Maki told members of a House of Commons committee studying the pipeline that the expansion has been performing “very well” since coming online on May 1, adding that the ball is now in Ottawa’s court to ensure that taxpayers get a fair return on their investment.
“In my time in the pipeline sector, there’s one thing that’s really stuck with me,” Maki said in witness testimony. “And that is the importance of being both a disciplined buyer and a disciplined seller.”
“When the time is right, Canada can sell (the pipeline) and the outcome that they should expect is the recovery of the taxpayers’ capital.”
Maki also shared that the pipeline expansion, Canada’s first new pipeline to the coast in four decades, has already pushed back the discount importers have historically paid for Canadian crude by around $10 per barrel.
Not all committee members were sold on Maki’s sunny assessment of the pipeline’s eventual sale.
NDP MP Charlie Angus said he couldn’t square the pipeline’s high purported resale value with the fact that it’s currently selling product at a loss to attract customers.
“If (the pipeline) is supposed to be so profitable and we’re supposed to be getting our money back, why are we (losing money) on every barrel shipped?” Angus asked. “That just doesn’t add up.”
Angus speculated that the federal government was using a subsidiary “shell company”, TMP Finance Ltd., to hide the project’s losses.
“You’ve got a company that’s set up that exists to hold debt with no employees, that looks to me like a shell company,” Angus told Maki in a tense exchange.
“A shell company’s not all that difficult to set up if you’re going to keep all the debt off your books so then you can come to us at a future meeting and say… we’re going to get all our money back,” said Angus.
A mid-2022 report released by the Parliamentary Budget Officer (PBO) found that the pipeline expansion was on track to lose $600 million, based on an estimated cost of $21.4 billion.
Maki told the committee that the financial picture has changed dramatically now that the pipeline is operational, when asked about the PBO report. He added that multiple parties have said they’re interested in buying the pipeline but have also expressed concerns about the lack of certainty in Canada’s regulatory environment.
The long-delayed West Coast pipeline expansion has seen its costs swell more than sixfold since it was first proposed in 2013, at an estimated cost of $5.4 billion.
The federal government paid $4.5 billion to buy the then-stalled project from Houston, Tx.-based Kinder Morgan in 2018.
Federal officials indicated in May that they plan to sell the pipeline eventually but are in no hurry to do so.
TC Energy Corp. (TSX) was trading at $65.49 a share on Monday, up 46 per cent from late April.
National Post
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