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Feds pay for pipeline

UPDATE 6:10 a.m.

The federal Liberal government plans to spend $4.5 billion to buy the Trans Mountain pipeline and all of Kinder Morgan Canada's core assets.

Finance Minister Bill Morneau says that in return, Kinder Morgan will go ahead with its original plan to twin the pipeline this summer while the sale is finalized, which likely won't happen until August.

Morneau says once the sale is complete, Canada will continue the construction on its own, with a view to eventually selling the whole thing down the road, once market conditions would allow it to get the best price.

Morneau presented the options during an early-morning cabinet meeting today before ministers made a decision on how to proceed.

Export Development Canada will finance the purchase, which includes the pipeline, pumping stations and rights of way along the route between Edmonton and Vancouver, as well as the marine terminal in Burnaby, B.C., where oil is loaded onto tankers for export.

Morneau says the federal government does not plan to be a long-term owner and is in negotiations with interested investors, including Indigenous communities, pension funds and the Alberta government.


ORIGINAL 5:48 a.m.

Kinder Morgan is holding a Canada wide conference call at 6:10 a.m. Pacific Time.

The Federal government is meeting in Ottawa in a last-minute attempt to save the Trans Mountain pipeline which runs from Alberta to the coast through Burnaby B.C.

Finance Minister Bill Morneau is expected to announce as early as Tuesday morning where the government plans to go with Kinder Morgan to ensure the controversial Trans Mountain pipeline expansion will be built.

There are three options on the table, which include the government buying and building the expansion, then selling it once it's complete; and buying it on an interim basis, then selling it to investors and leaving them to handle the construction.

Morneau has already unveiled the third option: leaving original project architect Kinder Morgan to handle construction, but covering any cost overruns incurred as a result of political interference.

The federal cabinet has been summoned to meet Tuesday morning, two hours earlier than usual, after which Morneau will discuss which of the three options the government has decided on.

Kinder Morgan gave Ottawa until Thursday to convince it to proceed by settling down jittery investors who fear a court challenge from the B.C. government would make the project too great a liability.

Prime Minister Justin Trudeau has put a lot of political capital on the project, pledging over and over again that the pipeline expansion is in national interest and will be built one way or another.

Since the government has declared the project to be in the national interest, it has financial tools available to it to buy into the project, similar to when the former government bailed out General Motors and Chrysler during the financial crisis in 2008 and 2009.

Trudeau said Canada loses $15 billion a year because oil cannot be exported anywhere but the United States, adding that the pipeline expansion opens up the option of exporting to Asian markets.

-with files from CP



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