‘Risks and uncertainties’ could make Trans Mountain unprofitable, says budget watchdog

Trans Mountain remains a profitable investment for Canadian taxpayers but changes in oil demand, construction delays and soaring costs could quickly change that assessment, says Canada’s budget watchdog.

New figures from the Office of the Parliamentary Budget Officer show the government-owned pipeline is still a profitable investment based on net present value calculations — measurements of an investment’s financial value over time. The PBO estimates that since the government purchased the pipeline in 2018 for $4.4 billion, its value has increased to $5 billion.

But as the Trans Mountain project proceeds with the expansion of its Edmonton-to-Burnaby, B.C. pipeline, the report warns that “risks and uncertainties” hang over its future viability.

The government-owned asset could become less viable if pipeline demand and construction costs and delays increase, the analysis shows. The pipeline’s financial outlook could worsen further, the report adds, due to economic uncertainties driven by the COVID-19 pandemic and the specific climate and environmental policies the federal government adopts to meet its net-zero greenhouse gas emissions target.

For example, the report suggests that if the pipeline’s completion were to be delayed by just one year, the government could lose about $400 million of its purchase value. The pipeline also could lose millions or even billions of dollars more if other factors such as delays, soaring budgets and contract commitments change over time, the report says.

The Office of the Parliamentary Budget Officer (PBO) is an independent and non-partisan office of Parliament. It provides analyses of budgets and other financial and economic policies with national significance.

NDP MPs asked the PBO to provide an update on the costs of the Trans Mountain pipeline and expansion project in July. New Democrats Laurel Collins and Peter Julian asked for the review because of what they called “delays and rising costs during the pandemic.”

On Tuesday, Julian said investing more money in Trans Mountain would be a risky gamble for the Liberals.

“We’re simply calling on Mr. Trudeau today to stop rolling the dice on Trans Mountain,” he said. “What we really need to do is invest this money in clean energy production.”

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