Ottawa ‘unlikely’ to see profit from Trans Mountain sale, budget watchdog tells committee

OTTAWA — Parliamentary Budget Officer Yves Giroux said on Monday Ottawa is likely to lose money on its eventual sale of the Trans Mountain pipeline, after shelling out more than $34 billion to complete the project.

Giroux told members of a House of Commons committee studying the matter that federal officials will be hard-pressed to find a private buyer willing to pay a premium for the pipeline, which has been operational since May, even under an optimistic scenario where foreign demand for Canadian oil stays high.

“If the Trans Mountain pipeline system were sold in 2024 (present values), the government would record a loss on the sale,” Giroux said in a brief opening statement.

Giroux was accompanied by adviser Jason Stanton, the lead author of a PBO update on the Trans Mountain expansion published earlier this month.

The two were on hand to answer questions from MPs about the assumptions underpinning the PBO analysis, which estimated that the pipeline would fetch between $29.6 billion and $33.4 billion on the open market.

Giroux told the committee that much of this will depend on whether its initial 20-year contracts are renewed in the early to mid-2040s. He indicated that contracts are less likely to be renewed if there is abundant excess pipeline capacity by then.

There is still considerable debate among analysts over when global demand for oil will peak, with estimates ranging between later this decade and 2050.

When pressed by Conservatives on the committee, Giroux conceded that federal climate policies like the incoming oil and gas emissions cap could make the pipeline a less attractive asset for prospective buyers.

“The government is currently in a situation where it owns an asset, and the value of the asset is determined, in part, by its own policies,” Giroux said in an exchange with Conservative MP Jeremy Patzer.

He added that the PBO is currently studying the emissions cap’s broader economic impacts.

Giroux also acknowledged that his testimony was inconsistent with that of Deputy Prime Minister Chrystia Freeland, who told the same committee earlier this month that she expected the federal government to recoup billions in the pipeline’s eventual sale.

However, he also stressed that this didn’t necessarily mean Freeland was lying, as she could have been speaking on the basis of privileged information.

“It’s possible that (Freeland) has had discussions with potential buyers,” Giroux told NDP MP Rachel Blaney.

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