OTTAWA—Parliament erupted in outrage after the federal Liberal cabinet approved a controversial plan Tuesday to spend $4.5 billion to buy the entire Trans Mountain pipeline project and take on potentially billions more in construction costs to expand it.

Conservatives slammed Prime Minister Justin Trudeau for “screwing up” and being forced to nationalize an oil pipeline because he could not provide international energy investors the certainty they need.

New Democrats hammered Trudeau’s government for failing future generations on climate change.

Heading into cabinet early Tuesday, Trudeau was asked about the risks of his plan to taxpayers or the environment, but he was tight-lipped, saying only that “we’re going to get that pipeline built.”

The prime minister was not in the Commons to face his Opposition, leaving his Finance Minister Bill Morneau to defend the move just hours after announcing it.

Morneau told a news conference the federal government will create a Crown corporation to take over Kinder Morgan’s pipeline, and all the rights, assets and the Canadian management team associated with its planned expansion, effective in August. Meanwhile, with Kinder Morgan’s help, Ottawa will look for another private sector buyer to take it on and build it.

But if no buyer is found, Ottawa — and taxpayers — will foot the bill to build the pipeline.

Morneau defended the decision, saying $4.5 billion is a “fair price” for a project with “significant commercial value.”

The deal ensures construction that was suspended April 8 by Kinder Morgan’s jittery investors will now begin immediately, with the federal government agreeing to a loan guarantee for the company to resume building — a cost baked into the overall $4.5-billion purchase price.

Kinder Morgan will help federal officials to market the project for the next couple of months. Morneau said he is prepared for Ottawa to own the project outright for the “short-to-medium-term.” He said, however, he has no interest in owning it over the long-term and believes there will be interested buyers. Government officials say it is much harder for the B.C. government to regulate against a federal Crown-owned project than a private sector proponent.

Weeks of tense negotiations with Texas-based Kinder Morgan came to a head last Wednesday in Toronto after two days of intense talks between the company’s four-person team led by president Steve Kean and five negotiators for the federal government led by Justin Trudeau’s principal advisor Gerry Butts and officials in Morneau’s office. Late Monday night, senior bureaucrats, including the deputy minister of finance, were briefed on what the political team had finalized.

In the end, Ottawa and Kinder Morgan reached a deal that would see Kinder Morgan Canada begin construction immediately for the start of the summer season on a proposal to twin the existing 1,150-km pipeline, build another 980 km of new pipeline, in order to triple the capacity to ship Alberta crude oil to B.C. coastal waters.

To sweeten the deal for any potential future buyer, the Trudeau government will extend indemnity or insurance to cover any “extraordinary” politically-motivated delays caused by any province or municipality, and will even promise to buy back the project if it confronts losses in the courts or cannot complete the project despite “commercially reasonable efforts.”

However, Conservatives, New Democrats and the Green party blasted Morneau for downplaying the hit to Canadian taxpayers, saying $4.5 billion won’t cover future construction costs.

Kinder Morgan has already spent about $1 billion on the pipeline expansion, and in December estimated the project expansion cost at $7.4 billion overall.

Dennis McConaghy, a former Trans Canada pipeline executive and now a visiting fellow at the public policy and energy studies schools at the Ivey Business School at the University of Western Ontario, said construction costs could run to another $6 billion to $7 billion, given what is now an overly “ambitious” timeline to finish it by 2020.

Delays will only add to that cost.

Morneau wouldn’t speculate on this, merely saying construction costs would be recovered on the basis that the “user pay.”

Officials who briefed reporters said it isn’t in the public interest for Ottawa to put a price on future costs publicly, as it could affect commercial negotiations with investors. As is the case with all pipelines, the costs of construction will be financed by loans in the short-term, but recovered over long-term through contracts that Alberta oil producers have already signed to pump light, refined and heavy crude products through Trans Mountain facilities, they said.

Morneau said Indigenous groups, pension funds “and others” have already expressed interest in buying in.

But McConaghy said he wouldn’t expect any other private investor to step up until the new pipe is in the ground and operating and all the “completion risk” that Kinder Morgan found unacceptable is removed.

The project faces stiff opposition in B.C. from environmentalists and Indigenous groups, although 43 First Nations groups have signed mutual benefits agreements with the company.

McConaghy said Ottawa’s move is “bittersweet,” because, while it is likely to ensure the project will get built, it also demonstrates that regulatory approvals in Canada are not enough to move a big project forward to completion, that protestors can litigate endlessly in the courts to stall a company’s plans, and investors can have no guarantee that Canada can provide certainty.

Alberta Premier Rachel Notley, who committed Tuesday to put $2 billion into an “indemnity pool” to aid the federal government’s efforts, called the announcement a “major step forward for all Canadians.”

“We have met the deadline. This project has more certainty than ever before,” Notley said.

The B.C. government said Ottawa’s move changes nothing.

Premier John Horgan whose minority government is propped up by the Green party, said he has no intention of withdrawing or changing a legal challenge on the question of jurisdiction that his government has referred to a B.C. court.

Horgan wants the court to declare the province can restrict the flow of heavy bitumen through its territory to coastal waters, in the name of environmental protection. He suggested there are real concerns about the economic viability of the project given the price of oil. “Accountability in this case now clearly falls to the federal government.”

Horgan encouraged B.C. residents to oppose the project, saying they are “entitled” to protest, and adding “you need to do that in a way that is peaceful and civil.”

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Grand Chief Stewart Phillip, president of the Union of B.C. Indian Chiefs, said “We are absolutely shocked and appalled that Canada is willingly investing taxpayers’ money in such a highly controversial fossil-fuel expansion project so risky that a major resource company has walked away and there are no known buyers lined up.”

“No means no; the project does not have the consent it requires, and we will not stand down no matter who buys this ill-fated and exorbitantly priced pipeline. When the CEO says ‘it’s a great day’ after selling a project, the buyer should worry.”

Conservative Leader Andrew Scheer is accusing Justin Trudeau of “trying to buy his way out of a problem” after the government announced a deal to buy the Trans Mountain pipeline assets from Kinder Morgan for $4.5 billion. (The Canadian Press)

Conservative Leader Andrew Scheer said the decision leaves taxpayers on the hook for Trudeau’s “failure” to manage the energy file.

“Kinder Morgan wasn’t asking for the money. They were asking for certainty and a pathway to get the project built,” Scheer told reporters.

The Conservative leader said the decision leaves the expansion project no closer to a reality. “The impediments to this project being built are still there. We still have a government in British Columbia that is doing everything it can to throw roadblocks,” Scheer said.

“You don’t spend 4.5 billion on a pipeline if you’re serious about climate change,” said NDP Leader Jagmeet Singh, who slammed Trudeau for having “no vision for the future.”

Trudeau “has betrayed his promise to end fossil-fuel subsidies,” said Singh, who added opposition to the project will only grow while the government will spend millions “to create short-term jobs that will not be there for the next generation.”

Green Party Leader Elizabeth May called the pipeline purchase “an historic blunder with taxpayer dollars,” citing documents from the National Energy Board that show Kinder Morgan bought the existing Trans Mountain pipeline from its previous owner for $550 million in 2007 — much less than the $4.5 billion the government will pay, she said.

She, too, accused Ottawa of writing a “blank cheque” for the construction costs.

“It seems completely insane,” May said.

“And historically, I’m quite certain that this will go down as an epic financial, economic boondoggle.”

The Canadian Taxpayers’ Federation said it would saddle taxpayers with costs that should be borne by the private sector.

“This decision represents both a colossal failure of the Trudeau government to enforce the law of the land, and a massive, unnecessary financial burden on Canadian taxpayers,” the federation said in a statement.

“This move sets a terrible precedent and signals to other prospective investors that large projects such as pipelines cannot be built by private industry in Canada,” it said.

Trudeau’s choices had included buying a partial equity stake as Alberta’s provincial NDP government also offered to do; taking over the project outright to build it then sell it to other investors, and buying it from Kinder Morgan and flipping it quickly to other interested investors to build it.

Trudeau and Morneau had offered to “indemnify” or insure Kinder Morgan, a company with headquarters in Houston, against unexpected costs due to delays caused by the B.C. government’s litigation. But Kinder Morgan told Ottawa publicly two weeks ago that it “appreciated” Morneau’s offer to cover its losses, but the two sides were not “in alignment.”

In the end, it was clearly not enough.

Trudeau believes the only way to ensure that construction gets underway immediately and the project’s 2020 completion deadline is met is for Ottawa to step in, because the federal government is best placed to confront the B.C. government’s court challenge, which seeks to assert provincial jurisdiction to block it in the name of the protection of coastal waters.

Morneau again declared the pipeline expansion a vital strategic interest for the country — one that will create tens of thousands of jobs in B.C. and Alberta, and ensure Alberta’s oil sands exports are no longer sold at a discount mainly to U.S. refineries, which Trudeau says is an annual $15-billion hit to the Canadian economy.

Trudeau and the Alberta government have suggested Alberta’s agreement to participate in the federal climate change plan, which calls for the imposition of a national carbon tax, depends on getting Alberta’s oil to markets.

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