With the Kinder Morgan Canada Limited-imposed May 31 deadline fast approaching and with his sights squarely set on B.C. Premier John Horgan, federal Finance Minister Bill Morneau says his government is prepared to indemnify the $7.4 billion Trans Mountain expansion project.
That offer, he added, would also apply to any other potential investor that could step in if Kinder Morgan chooses to back out of the contentious project.
“We’re prepared … to indemnify the project against any financial loss that derives from Premier Horgan’s attempts to delay or obstruct the project,” Morneau said during a press conference in Ottawa this morning.
“This indemnification would allow Kinder Morgan to finish what they started when they received federal and B.C. approval … If Kinder Morgan at some stage decides not to proceed with the Trans Mountain expansion project, the indemnity against financial loss would still be in place for another party who might wish to take over the project.”
Morneau made his comments just hours prior to Kinder Morgan’s annual general meeting in Calgary. He declined to say what aid Ottawa could provide or how much.
But it appears Morneau's offer may not be enough to convince Kinder Morgan to proceed with the project. In a statement issued Wednesday morning, the company thanks Morneau for the offer but suggests it may not be enough for the company to sanction the project.
“We acknowledge the comments by Minister Morneau this morning and appreciate his acknowledgment of the uncertainty created by the BC Government’s stated intentions to ‘do whatever it takes to stop the Trans Mountain Expansion Project’ and the ‘exceptional political risk’ this federally and provincially-approved project continues to face," the company said in a prepared statement.
"We appreciate his recognition that a private company ‘cannot resolve differences between governments.’”
"We remain steadfast in our previously stated principles: clarity on the path forward, particularly with respect to the ability to construct through British Columbia, and ensuring adequate protection of our KML shareholders. We take very seriously our commitment to the Canadian families, workers and retirees who have invested in this company."
"While discussions are ongoing, we are not yet in alignment and will not negotiate in public. As we have stated, the May 31st deadline for these discussions is necessitated by approaching construction windows, the time required to mobilize contractors, and the need to commit significant new materials orders, among many other imperatives associated with such a large project."
Other investors possibly interested
Morneau said that he’s confident that if Kinder Morgan eventually bows out, interest would be strong from other potential investors.
“If Kinder Morgan isn’t interested in building the project, we think that plenty of investors would be interested in taking on this project, especially knowing that the federal government believes that it’s in the best interest of Canadians and is willing to provide indemnity to make sure that it gets done,” Morneau said.
“To the extent that any commercial actor would require indemnification against unconstitutional actions by a provincial government, we’re willing to deal with that risk because we believe firmly that this is a project that is in the federal jurisdiction.”
That said, Morneau reiterated the federal government’s stance that the Trans Mountain project is commercially viable and that indemnification further builds on its business case.
“What we can tell you is we see that there is an economic case for this project. We also see that it’s not reasonable to expect a private sector actor to deal with disputes between governments,” he said.
“We’ve found a way, we believe, to deal with that political risk and should Kinder Morgan not want to move forward with that approach to dealing with it, we think there’s other private sector actors who would be willing to move forward.”
He wouldn’t elaborate when asked if he’s had discussions with other parties: “I’ve been engaged in discussions with Kinder Morgan … I don’t have anything to report on in terms of other discussions.”
The finance minister noted that any federal support for the project must be “sound and fair and beneficial” to Canadians.
When asked if the federal government might consider taking an equity stake in the project as opposed to offering indemnity, Morneau was non-committal.
“I’m not actually going to conclude this morning on an eventual outcome. We’re not here to say we know the eventual outcome,” he responded. “Discussions are happening and I can’t get into those details.”
Morneau remains hopeful that an agreement can be reached with Kinder Morgan by the May 31 deadline.
“I can tell you that discussions with Kinder Morgan continue. We’re striving to get to an agreement by the May 31 deadline,” he said.
“For our part we’ll continue to discuss options with Kinder Morgan. We know there’s a reason to disagree in any negotiation, we’re confident that we can come to an agreement that’s fair for the shareholders of Kinder Morgan and one that’s right for Canadians.”
Horgan at fault?
Morneau was emphatic that the B.C. NDP government and its leader have overstepped its constitutional boundaries as it continues in its efforts to delay, and eventually kill, the project.
“I’ve been pretty clear we believe that what Premier Horgan has done is unconstitutional. It’s a federal jurisdiction and we are in this situation, we’re here today, because this is a project that has been provincially and federally approved and we’re being thwarted in our efforts to create the kind of jobs and economic advantage we see this project creating for Canadians,” he said.
Morneau said discussions with Alberta Premier Rachael Notley are ongoing.
“I can’t give you any details of our discussions, but we’re going to work together with the government of Alberta and with Premier Notley. I spoke with Premier Notley yesterday and I’m going to continue talking with her,” he said.