A watchdog said Thursday Canadian Prime Minister Justin Trudeau paid more than he needed to for a controversial oil pipeline to the Pacific — which could come back to haunt him in October elections.
The federal government stepped in to buy and effectively nationalize the Trans Mountain pipeline to get a key Canadian resource to new overseas markets after mounting legal challenges and environmental protests stalled the project.
In a report, the Parliamentary Budget Officer (PBO) estimated the current value of the pipeline was between Can$3.6 billion (US$2.7 billion) and Can$4.6 billion.
“From our analysis, the government of Canada’s purchase price of Can$4.4 billion does put it at the higher end of the pipeline’s valuation range,” said PBO Yves Giroux.
“Our financial assessment assumes of course that the pipeline is built on time and on budget,” he said in a statement.
Canada is the world’s fourth largest oil producer and exporter, but almost all of it goes to the United States.
Trudeau’s government has declared building new conduits to ship oil to new overseas markets a national imperative, in order to ease Canada’s reliance on the US and to get a better price for its oil. In August, the federal government bought the 715-mile (1,150-kilometer)
Trans Mountain pipeline and relaunched consultations with Pacific coast indigenous groups after a court ruled the tribes should get a say in the project to move 890,000 barrels per day.
The tribes worried that increased shipping from a marine terminal at the end of the route in Vancouver would impede the recovery of killer whale populations in the area.
Trudeau has faced fierce criticism from environmental activists for supporting the oil industry and from pipeline proponents who lament an increasingly onerous regulatory regime that has strangled growth in the oil sector.
Opposition parties heaped on more scorn in parliament Thursday, with the New Democrats accusing the ruling Liberals of squandering cash that could have gone to support “green jobs” while the Tories complained that the Trans Mountain pipeline remained stalled three years after it was approved.
The project is also key to Canada meeting its Paris climate target because Alberta — whose oil sands are the nation’s single largest pollution emitter — has agreed to take action against carbon emissions only if it gained access to new markets for its oil.
Construction of the new conduit was pegged at Can$7.4 billion in 2016, but the PBO estimates that it will now cost Can$9.3 billion by the time it is completed in 2021.