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Private-sector buyers could prove elusive as the federal government seeks to offload the Trans Mountain pipeline and expansion project, despite pledges by Ottawa to shoulder risks and help fund construction.

Finance Minister Bill Morneau on Tuesday said the federal government would shell out $4.5-billion to acquire the existing Trans Mountain line and its controversial expansion project, resuscitating a plan that had been near death.

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Steel pipe to be used in the oil pipeline construction of Kinder Morgan Canada’s Trans Mountain Expansion Project sit on rail cars at a stockpile site in Kamloops, B.C., on May 29, 2018.DENNIS OWEN/Reuters

The move is an extraordinary intervention by Prime Minister Justin Trudeau’s Liberal government to salvage a project that has become a potent symbol of Canada’s inability to develop its natural resources.

But it also raises an immediate dilemma for Mr. Trudeau and his Finance Minister: Despite assurances, no buyers appear willing to take on the tangle of legal, political and environmental risks that prompted U.S.-based Kinder Morgan Inc. to abandon the $7.4-billion expansion project in the first place.

“There are limited options,” said Rob Thummel of Tortoise Capital Advisors, which owns Kinder Morgan shares. “It’s a big cheque to write, so it’s probably got to be somebody with a sizable balance sheet.”

Large pension funds and private-equity players that covet steady financial returns are seen as possible investors, as are incumbent pipeline giants Enbridge Inc. and TransCanada Corp. All are likely to be wary of the expansion’s upfront risks, however.

The country’s largest pension-fund manager, the Canada Pension Plan Investment Board (CPPIB), is cool to the idea.

“CPPIB is not actively assessing an investment in the extension opportunity,” a spokesperson said.

Pipeline companies are dealing with their own issues. Enbridge is advancing $22-billion in expansions and has been selling assets to cut debt. TransCanada is pushing ahead with its stalled Keystone XL project.

Neither company would speculate on the fate of Trans Mountain on Tuesday.

“We are not involved in discussions about the Trans Mountain pipeline,” TransCanada spokesman Grady Semmens said.

Weigh Anchor: The Trans Mountain pipeline expansion project will bring an increase in tanker traffic off the coast of British Columbia. The Globe follows a tanker as it threads the needle from Burnaby to the open ocean

The expansion would nearly triple the flow of oil and refined products from Alberta to B.C. to 890,000 barrels, relieving pipeline congestion that has weighed heavily on prices for heavy oil-sands crude.

But costs have spiked from an initial price tag of $5.4-billion to $7.4-billion and are likely to increase further owing to delays, reducing the likelihood that Ottawa could flip the project quickly.

“They obviously tried to find buyers and they couldn’t,” said Laura Lau, senior portfolio manager at Brompton Funds in Toronto. “They may have to put more money into it to build it.”

To entice bidders, Ottawa has pledged to cover financial losses should the expansion succumb to the legal challenges and political resistance that stymied Kinder Morgan.

The Houston-based company agreed to help Ottawa until July 22 to find a new owner for the project, although it is not clear what that means. In a conference call on Tuesday, chief executive Steve Kean said the company gets paid regardless of whether the federal government strikes a deal. He did not take media questions.

Alberta Premier Rachel Notley would not speculate on eventual buyers on Tuesday, but does not believe it will be necessary for her province to buy the whole thing – an option she floated earlier this year.

A spokesman for the Alberta Investment Management Corp. would not comment on potential investments, but called the federal acquisition “a positive step towards ensuring the future of this vital initiative.”

Richard Masson, a fellow at the University of Calgary School of Public Policy, and the former head of the Alberta Petroleum Marketing Commission, said Ottawa is likely to remain the owner of the pipeline until the expansion is nearly or fully completed.

Some pension funds, for instance, are reluctant to take on early project risk and are much more comfortable with predictable cash-flows. They also lack the technical expertise to build and operate such an asset, necessitating a partnership.

“I would be surprised if there’s anybody in the near term, partly because when a company like Kinder who knows the most about the pipeline says ‘we’re stepping back,’ it’s a pretty tough sell for any other party to say we want to step into their shoes,” Mr. Masson said.

“I would be surprised in the near term if anybody is kind of able to say ‘this looks like such a good opportunity – I’m going to try convince my board,’” he added.

“Much more likely what will happen is we will see the pipeline either mostly built, or all-the-way built, before we find a way to sell it to somebody.”

With files from Jacqueline Nelson in Toronto.

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