As we’ve mentioned before, the shareholders of Kinder Morgan received a great gift from the Canadian taxpayers when the federal government stepped up to take the pesky pipeline project off their hands for a cool $4.4 billion last year.
At the time, some taxpayers were left scratching their heads, wondering why – if it was such a great investment – was Kinder Morgan so happy to unload it.
That opinion was apparently shared by the federal parliamentary budget officer, who pointed out this week that it was risky for the government to buy something nobody else in the private sector wanted.
In fact, considering the intense opposition to the pipeline in B.C. from the provincial government, environmental groups and First Nations, it could be argued the project was not without a significant amount of risk, which other potential buyers had noted.
Usually risky financial propositions come at a discount.
But apparently not so with the pipeline.
The parliamentary budget officer said the federal government didn’t even bother with much haggling over the cost. Instead Ottawa paid the “sticker” price for the project – estimated at between $3.6 billion and $4.6 billion. And that’s just the beginning.
According to the parliamentary budget officer, actually expanding the pipeline’s capacity will cost about $9.3 billion – if the project gets finished in the next three years. But should the project encounter any delays – and what are the chances of that? – the pipeline could quickly turn into an expensive political boondoggle.
Given the history of the project to date, we’re not optimistic about taxpayers coming out of the deal ahead.
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