Prime Minister Justin Trudeau's ambitious plan to sell the Trans Mountain pipeline, a key conduit for Canadian oil exports, faces mounting challenges, including cost overruns, unresolved Indigenous participation, and a looming election.
The government acquired the controversial pipeline in 2018 from Kinder Morgan after the company threatened to abandon the expansion project due to environmental opposition and regulatory delays. However, the expansion process has stalled, despite Trudeau's pledge to divest the asset and generate wealth for Indigenous groups, raising concerns among stakeholders.
One major hurdle is the stalled negotiation with over 120 potentially impacted Indigenous groups. The government proposed a special-purpose vehicle to hold a stake in the pipeline, but a meeting with chiefs in September yielded little progress, leading to accusations of a "failure" by some participants. Clarifying Indigenous participation is crucial for investor confidence, but disagreements among groups and lack of clear terms hinder the process.
The Trans Mountain expansion has also faced significant financial challenges, with costs soaring over the C$35 billion mark. The prospect of selling it at a profit also seems increasingly unlikely, as analysts estimate potential sale prices between C$15 billion and C$28 billion.
High interim tolls have sparked legal disputes with oil companies like Canadian Natural Resources. The uncertainty is further compounded as investors await final tolls and construction completion before committing.
With a federal election likely in 2025, and the Liberal Party trailing the Conservatives, Trudeau faces time constraints. The longer the sale drags on, the more it risks colliding with the election cycle, potentially leading to further delays under a different government as potential buyers remain elusive.
While Pembina Pipeline and Brookfield are mentioned as potential buyers, both have expressed reservations due to unresolved regulatory and construction issues. Other major players like Enbridge and TC Energy are not interested. Alberta's pension fund and Brookfield Infrastructure Partners remain possibilities, but a clear frontrunner has not emerged.