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Finance Minister Bill Morneau speaks during an interview with Reuters in Toronto on Thursday.CARLO ALLEGRI/Reuters

Federal Finance Minister Bill Morneau says the guarantee against financial loss that the Trudeau government has pledged to the Trans Mountain pipeline expansion project would likely come at no cost to Canadian taxpayers − and Ottawa might even make money off of it.

Earlier this week, the Liberal government vowed to indemnify the project against costs incurred if the B.C. government delays or obstructs it. The move was an attempt to spur Kinder Morgan, the company behind the expansion, to resume construction or sell it to another entity that would.

If Kinder Morgan does walk away, Mr. Morneau says “plenty of investors would be interested” in the project, and highlighted in a Reuters interview that Canada’s pension funds could be potential players.

The Canada Pension Plan Investment Board (CPPIB), which manages the largest pension fund in the country, said that it might consider becoming involved.

“If it’s an opportunity that has decent returns, then we’ll look at it,” CPPIB CEO Mark Machin said later to the news agency, adding that the federal government’s indemnity pledge against political risk was helpful.

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In April, after mounting opposition from the B.C. government, environmental groups and protesters, Kinder Morgan halted all non-essential spending on the $7.4-billion plan to twin an existing pipeline between Edmonton and Burnaby, B.C. It gave Ottawa until May 31 to meet its conditions to move ahead on the project.

Mr. Morneau is now seeking to play down concerns, amplified by environmentalist critics and the Green Party this week, that the pledge he announced this week amounts to a “blank cheque” for an American pipeline company.

On Thursday in Toronto, the Finance Minister, who has yet to fully explain how an indemnity would work, said Canadians should think of it like insurance. And Ottawa, he said, would in return earn a premium from Trans Mountain project backers for extending this insurance.

“This is insurance against something that [a] private-sector actor can’t deal with,” Mr. Morneau said of B.C.’s opposition to the project. Premier John Horgan has proposed measures that would threaten the Trans Mountain expansion.

This indemnity wouldn’t be offered free of charge, Mr. Morneau said. “Like any insurance, it will have a premium attached to it.”

Reporters asked Mr. Morneau on Thursday to reveal how much the indemnification might amount to − or what the resulting financial risk could be for the federal government.

The finance minister says the federal government is willing to support other investors interested in the Trans Mountain pipeline expansion if Kinder Morgan backs out. Bill Morneau says building the expansion is in the 'best interest' of Canadians.

The Canadian Press

The Finance Minister responded by saying he believes the approach Ottawa is taking would preclude any big bailout by taxpayers.

“By talking about it as a commercial project, and by talking about the fact we could find a way to indemnify and charge for that indemnification, we don’t expect that there would be any costs to Canada,” Mr. Morneau said.

“We actually think this is a project that can be done on commercial terms and we’re trying to find a way that ensures that happens.”

His assessment that this guarantee won’t burden taxpayers is premised on the expectation that there is a strong enough business case for the Trans Mountain expansion that some other entity would build it even if Kinder Morgan walks away.

Prime Minister Justin Trudeau, speaking to reporters in New York on Thursday, said he’s confident the economics of the Trans Mountain expansion are solid because it will help Canadians fetch higher prices for oil exports “The discount Canadian oil producers [must accept] because we only have a single market to which we sell 99 per cent of our oil exports – the United States − means we’re losing about $15-billion a year. And getting access to different markets for our natural resources actually makes good economic sense.“

Conservative natural resources critic Shannon Stubbs said Mr. Morneau’s assertion that this guarantee wouldn't cost Canadians anything “makes no sense” and called on the Liberal government to lay out specifically what this indemnity would entail.

Negotiations between Ottawa and Kinder Morgan are ongoing. Last week, Mr. Morneau flew to Houston for a face-to-face meeting with Kinder Morgan Inc. CEO Steve Kean.

This is insurance against something that [a] private-sector actor can’t deal with.

Finance Minister Bill Morneau

Ali Hounsell, a spokeswoman for Kinder Morgan Canada Ltd., declined to answer whether the company was willing to pay Ottawa a premium for the promised indemnity. She said the company will not be negotiating in public. “Therefore, [it] will have nothing to say on Mr. Morneau’s comments.”

Separately, the fight between the Alberta and B.C. governments over the Trans Mountain expansion is expected to end up in Alberta’s courts.

A bill allowing Alberta to choke off the supply of fossil fuels to British Columbia will be challenged in the courts by next week, B.C. Attorney-General David Eby said Thursday.

Mr. Eby contends that the legislation passed Wednesday evening in Alberta’s legislature, designed to inflict economic pain on British Columbia over the Kinder Morgan pipeline dispute, is unconstitutional.

“We are disappointed that the Government of Alberta has rejected our proposal to refer their legislation to the courts,” he said. “We will now move forward and challenge the constitutional validity of Bill 12 in the Court of Queen’s Bench of Alberta by next week.”

B.C. is already fighting the expansion of the Trans Mountain oil pipeline in the federal Court of Appeal and in B.C. Supreme Court. As well, it has referred its own proposed legislation to cap oil shipments across the province to the B.C. Court of Appeal.

Earlier this week, B.C. proposed that Alberta refer Bill 12, Preserving Canada’s Economic Prosperity Act, to the courts to determine if it respects jurisdictional powers under the Canadian Constitution.

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