Likely construction delays will mean Ottawa overpaid for Trans Mountain, PBO says – by Bill Curry (Globe and Mail – February 1, 2019)

Parliament’s spending watchdog Yves Giroux warned there is a high risk that delays and cost overruns will mean the Liberal government overpaid when it spent $4.4-billion last year to purchase the Trans Mountain pipeline, its related expansion project and other assets.

In a report released Thursday, the Parliamentary Budget Officer estimates the value of the Trans Mountain pipeline and the expansion project at between $3.6-billion and $4.6-billion. The PBO’s figure does not include related assets such as pipeline terminals that were included as part of Ottawa’s transaction with Kinder Morgan Inc.

“If it was a car, we’d say they paid sticker price. They didn’t negotiate very much,” Mr. Giroux said. “Should there be a delay in construction costs or an increase in construction costs, then it’s quite clear to us that the government will have overpaid.” Mr. Giroux said those scenarios appear likely.

Finance Minister Bill Morneau announced on May 29, 2018, that the federal government would step in to buy the pipeline, the expansion project and related assets for $4.5-billion. Once the deal was completed on Aug. 31, 2018, the final price was approximately $4.4-billion, net of adjustments.

Speaking with reporters Thursday, Mr. Morneau disputed Mr. Giroux’s assertion that Ottawa could have obtained a better deal. His office pointed to corporate filings that showed Kinder Morgan’s original asking price was $6.5-billion.

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