The Trans Mountain oil pipeline is costing a Canadian Crown corporation some staggering interest expenses that cast doubt on strong revenues from the infrastructure touted in the federal government’s recent economic update.
The interest expenses were $20 million over a single month in September, right after Prime Minister Justin Trudeau’s government purchased the pipeline and related assets from Texas energy company Kinder Morgan for $4.5 billion.
As part of the purchase, the government also had to set aside an additional $500 million as a security deposit in case of environmental damage, and this appears to be part of the interest expenses.
If the interest expenses continue to pile up at that rate over the year, they will come to represent a larger sum than the amount of money that the government has said the pipeline is on track to raise this year primarily from toll charges.
Oil pipelines earn revenues by charging tolls to companies that are shipping fuels on the infrastructure. The Trudeau government has said that the proposed Trans Mountain expansion project, if completed, would generate more revenues and could be sold back to the private sector, along with existing assets, as a profitable venture.
The Trudeau government’s Trans Mountain purchase has triggered staggering interest expenses
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