To be honest, I was so gobsmacked that I initially didn't even register this. My brain circuitry short-circuited and got stuck in "Oh no they didn't" loop. It happens.
This is even better. Loan guarantees to Kinder Morgan to continue work til the gov takes over in August. The fact they paid about $1.2B more than it's currently worth. Then paying to build it. Then trying to offload it.....or not. Then openly musing about having the option to buy it back under certain conditions in the future. This and Morneau saying the gov is probably going to end up holding it "in the medium term" (which, obviously means nothing but sure as hell isn't a year or two).
Can I expect quarterly dividend cheques from profits? Never mind that, better question: will the anticipated profits cover the interest costs incurred on the money used to buy and build it?
This is weird....my sunny ways include camping and bumming on a beach, these guys use the term to describe corporate welfare.
There seems to be a lot of assumptions and just plain falsehoods being tossed around about this issue:
1. The feds, by not explicitly enforcing its decision to approve the pipeline created an environment where no private enterprise would ever risk its capital not knowing whether it could be constructed let alone operated.
2. The feds could have executed a variety of laws and actions, within its power to force BC to back down, this could include withholding transfer payments or levying a denial tax on BC. They refused to do so.
3. The feds paid market price for the pipeline and related assets. The difference in your estimate is the cumulative to date spend on the new pipeline, include hundreds of millions of dollars spent by KM required by the feds.
4. KML currently pays a dividend, chances are the existing profitable pipeline can if the government wants to.
5. The reason why nobody wants to build new refineries is
(a) that there are so many existing refineries already re-tooled for oil sands. They were intended for Venezuela, but thanks to socialism there Venezuela's industry has collapsed.
(b) new refineries are expensive and when the feds refuse to enforce the rule of law on projects they approve, nobody wants to invest in Canada.
6. Most realistic oil demand forecasts show a need for this pipeline for the next 25 years at least. That is sufficient to generate a return greater than the TSX for the last 5. The forecasts by the enviro-lobby and green radical are consistently wrong, after all Al gore once said there'd be no more snows on Kilimanjaro.
7. Pipeline abandonment are fairly easy and have negligible environmental impact. The pipeline is purged of product with nitrogen and sealed, it remains in the ground just like naturally occurring metals.
8. I believe in man-made climate change and its effects. Demanding Canada destroy the 1 remaining growth industry so that major polluters like China and India can continue to increase their pollution well into the 2020's is not how you save the planet.
