{"id":11431,"date":"2024-07-27T04:22:11","date_gmt":"2024-07-27T04:22:11","guid":{"rendered":"https:\/\/roydadnaft.ir\/English\/?p=11431"},"modified":"2024-07-27T04:22:11","modified_gmt":"2024-07-27T04:22:11","slug":"canada-to-delay-trans-mountain-sale-until-after-2025-election-sources","status":"publish","type":"post","link":"https:\/\/roydadnaft.ir\/English\/11431\/","title":{"rendered":"Canada to delay Trans Mountain sale until after 2025 election: sources"},"content":{"rendered":"

RoydadNaft – <\/a><\/span>\u00a0Prime Minister Justin Trudeau\u2019s government is likely to stall the sale of the Trans Mountain oil pipeline until after the federal election in 2025, according to officials familiar with internal discussions.<\/p>\n

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The pipeline, which transports crude from Alberta to the west coast for export to global markets, was bought by the government in 2018 to rescue a project to nearly triple its capacity. Trudeau has said the government doesn\u2019t intend to be a long-term owner.<\/p>\n<\/section>\n

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The Trans Mountain expansion was finally completed this year and oil is now flowing through the line. It\u2019s already boosting Canada\u2019s crude exports. But preparing it for a sale before the next election is proving complicated, and reasons to delay are piling up.<\/p>\n

Trudeau and Finance Minister Chrystia Freelandhaven\u2019t made any final decision on the timing of an auction, cautioned the officials, speaking on condition they not be identified.<\/p>\n

The government has promised to grant equity to dozens of Indigenous groups in Western Canada, and that process is moving slowly.<\/p>\n

There\u2019s also a regulatory battle over how much Trans Mountain charges oil companies to ship crude on the line. At about $34 billion, the project cost several times more than initial estimates \u2014 costs that it wants to pass on to its customers over time. Major oil producers including Cenovus Energy Inc. and Suncor Energy Inc. are pushing back.<\/p>\n

Oral hearings on pipeline tolls are scheduled to begin next May, according to a spokesperson for the Canada Energy Regulator. Until final tolls are decided, potential buyers won\u2019t have certainty on the pipeline\u2019s long-term revenue.<\/p>\n<\/section>\n

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Analysts have disagreed about the potential valuation of Trans Mountain, with estimates ranging as low as $15 billion and as high as around $30 billion. Even at the low end, it would be among the largest government-led asset sales in Canadian history.<\/p>\n

Delaying a sale gives the government more time to prove the value of the enlarged Trans Mountain system \u2014 which has a capacity of almost 900,000 barrels a day \u2014 and pay down or refinance debt. The government may also be in a position to fetch a higher price later on, if interest rates decline.<\/p>\n

It also comes with financial and political risk. Government ownership and expansion of Trans Mountain has harmed Trudeau\u2019s support with the environmentalist part of his political base, and he needs to consolidate left-leaning voters ahead of an election.<\/p>\n

On the other hand, selling it now has the potential to bring fresh criticism of the government, if it\u2019s unable to recoup the cost of construction.<\/p>\n

There\u2019s also concern in Ottawa about launching a sale that gets interrupted by an election \u2014 and possible change of government. A national vote is due in October 2025, but under Canada\u2019s parliamentary system it might happen earlier.<\/p>\n<\/section>\n

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\u201cThe federal government will launch a divestment process in due course,\u201d Katherine Cuplinskas, a spokesperson for Freeland, said in an email, declining to give specifics on timing. The pipeline expansion is an important investment in Canada\u2019s economy, she added, and is already boosting gross domestic product. In April, the Bank of Canada estimated that the startup of the line would add about one-quarter of a percentage point to GDP growth in the second quarter.<\/p>\n

Indigenous ownership<\/h2>\n

Potential buyers of Trans Mountain include pension funds and other institutions and well as infrastructure funds. But any buyer will probably want certainty on the size and scope of the Indigenous stake in the business.<\/p>\n

Trudeau\u2019s government has promised to give an ownership interest to Indigenous groups, which have historically shared little of Canada\u2019s enormous resource wealth. The courts have identified more than 100 First Nations in the western provinces that are impacted by the pipeline. Negotiations on how their stake will be divided are complex, and government officials told Bloomberg they didn\u2019t know how long it will take to reach a conclusion.<\/p>\n<\/section>\n

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Last year, Freeland proposed a special-purpose vehicle that would hold a stake in the pipeline, and each Indigenous group could decide whether to opt in. She also said the government would provide risk-free capital for groups wishing to take part.<\/p>\n

The looming election also makes it difficult to begin an auction, which would involve giving prospective buyers access to Trans Mountain\u2019s operational and financial data.<\/p>\n

Trudeau doesn\u2019t have full control over election timing because his Liberal Party caucus doesn\u2019t have a majority of the seats in the House of Commons. During an election period, the government formally goes into caretaker mode, delaying major decisions. Trudeau\u2019s Liberals are far behind the Conservative Party in opinion polls.<\/p>\n

Conservative lawmaker Jasraj Singh Hallan, the party\u2019s spokesperson on finance issues, said the Conservatives would prefer to have the private sector own the pipeline, but would need to assess the situation if elected.<\/p>\n

\u201cIf it wasn\u2019t for Trudeau\u2019s gatekeeping and anti-development regulations, the Trans Mountain pipeline would have been built by the private sector and it would have not cost Canadians a dime,\u201d Hallan said in an emailed statement.<\/p>\n

With assistance from Robert Tuttle and Laura Dhillon Kane.<\/em><\/p>\n

Bloomberg.com<\/a><\/p>\n<\/section>\n

Updated on