Trans Mountain earned $48 million over four-month period

CDEV annual report details Trans Mountain earnings, proposed sale of Ridley Terminals

Whispering Pines Chief Michael LeBourdais leads the charge for B.C. First Nations who want equity stake in Trans Mountain pipeline.

The Canadian government received $23 million in additional dividends in 2018 over 2017 from the Canada Development Investment Corporation (CDEV), thanks in part to new revenue generated by the Trans Mountain pipeline.

The Canadian government acquired the pipeline in August 2018 from Kinder Morgan Canada (TSX:KML) for $4.4 billion.

CDEV is now responsible for the pipeline’s ownership and financial reporting.

In its 2018 annual financial report, released Friday, May 3, CDEV reports that the Trans Mountain pipeline generated $129 million in revenue over a four-month period – from September to December, 2018 – and $48 million in earnings before interest, taxes, and depreciation (EBITDA).

It also notes that the pipeline’s earnings are not dependent on oil prices, so the revenue it generates is relatively stable and predictable, since it is based on tolling, not oil prices.

In other words, it’s safe to assume that the pipeline will generate about $387 million in revenue, and $144 million in EBITDA earnings annually.

CDEV paid the government $114 million in dividends in 2018, up from $91 million in 2017.

In addition to the Trans Mountain Pipeline Corporation, CDEV is also responsible for the Canada Hibernia Holding Corporation (CHHC), which owns 8.5% of the Hibernia offshore oil project in Newfoundland. The CHHC earned $76 million in profits for the government in 2018.

CDEV’s annual report said its mandate from government is to keep the Trans Mountain Pipeline Corporation in a state of readiness for sale, and notes that First Nation partnerships are being seriously considered by the government.

“CDEV should also consider ways for Indigenous groups to participate in the divestiture on commercial terms,” the annual report states. “Given the foregoing, the Government expects CDEV to ensure that the Trans Mountain assets are in a state of readiness to be divested.”

In addition to the Trans Mountain Corporation and CHHC, CDEV is also responsible for divesting Ridley Terminals in Prince Rupert.

“A sale process is now underway and we plan to recommend a sale transaction to the government in the spring of this year,” the annual report states.

First Nations in B.C. and Alberta have made it clear they want an equity stake in the Trans Mountain pipeline expansion.

Michael LeBourdais, chief of the Whispering Pines Indian Band in Kamloops, has been leading the effort in B.C. by First Nations that are seeking part ownership of the expanded pipeline.

LeBourdais told Business in Vancouver that First Nations would like to have a 51% per cent stake in the twinned pipeline, and would prefer to secure that ownership now, before the pipeline is expanded, not after it is completed.

His group would borrow from TD Securities to secure equity stakes in the pipeline. On the Alberta side, Athabasca Tribal Council and Athabasca River Metis are also seeking an equity stake in the pipeline.

“We’ve always wanted equity,” LeBourdais said, adding that it wasn’t until the federal government bought the pipeline that that become a real possibility.

“So when Canada bought the pipeline from Kinder Morgan, that opened the door for us to step back into the equity conversation.”

LeBourdais said he would like to see at least 51% ownership by First Nations.

“For me, I want to get it as close to 51% as possible, and then I want to tax the other 49%,” he said. “I really don’t care who owns the other 49%. I expect it to be a consortium of Canada, British Columbia and Alberta.”

He added that First Nation aspirations of owning the pipeline is not just based on economics. They also want control over what happens in their territories.

“Everybody else benefits from this pipe, except the original landowners, and that’s what I’m trying to change,” he said. “Whether it’s single pipe, twinned or tripled, I don’t care. I’m about the jurisdiction.

“I still want to own the pipe, whether it’s twinned or single. I don’t have environmental oversight right now. If I bought it today, tomorrow I would have environmental oversight.”

nbennett@biv.com

@nbennett_biv