Canada: Trans Mountain received $320M in government subsidies in first half 2019: report - - PressFrom - Canada
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Canada Trans Mountain received $320M in government subsidies in first half 2019: report

15:05  19 november  2019
15:05  19 november  2019 Source:   msn.com

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The Trans Mountain Pipeline System, or simply the Trans Mountain Pipeline, is a pipeline that carries crude and refined oil from Alberta to the coast of British Columbia, Canada.

Other projects that received subsidies included engineering works on self-elevating drilling rig, ultra-large iron ore carrier, robotics and China State Shipbuilding Corp (CSSC) shared that it has received approximately RMB117.59m (.71 m ) in government subsidies over the first six months of this

  Trans Mountain received $320M in government subsidies in first half 2019: report © Provided by Canadian Press Enterprises Inc

VANCOUVER — The Trans Mountain pipeline received $320 million in subsidies from the Canadian and Alberta governments in the first half of 2019, says a new report by an economic institute that analyzes environmental issues.

The money included $135.8 million in direct subsidies and $183.8 million in indirect subsidies that were not clearly disclosed to taxpayers, says the report by the Institute for Energy Economics and Financial Analysis.

"This is a very large subsidy. It really does require more public discussion and public disclosure," says Tom Sanzillo, the group's director of finance.

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Despite ongoing concerns raised by First Nations, the Trudeau government says it's "on track" to conclude its review and make a decision on the controversial Trans Mountain pipeline expansion project. Canadian Natural Resources Minister Amarjeet Sohi made the comments after concluding his

Trans Mountain spokesperson Ali Hounsell says the company never provided an estimate of how much medium crude oil escaped, other than to “ Trans Mountain had not provided an estimate of the volume spilled, other than to confirm with regulators that it was over the reportable threshold, until

Sanzillo and the report's co-author, institute financial analyst Kathy Hipple, analyzed the second-quarter report of the Canada Development Investment Corp., a Crown corporation meant to further the country's economic development that counts Trans Mountain Corp. among its subsidiaries.

The document is public but presents a consolidated picture of the development corporation's finances, including revenues from the Canada Hibernia Holding Corp., which operates the Crown's interest in oil reserves off Newfoundland and Labrador.

This accounting treatment obscures the real financial state of Trans Mountain, Sanzillo says.

"It's a good form of accounting. I'm not criticizing it. It just shouldn't be the only mechanism for showing the public how much money is being spent on this," he says.

B.C. First Nations drop out of court challenge, sign deals with Trans Mountain

  B.C. First Nations drop out of court challenge, sign deals with Trans Mountain KAMLOOPS, B.C. — Two First Nations in British Columbia's Interior that had been part of a court challenge against the Trans Mountain pipeline expansion have reversed course and signed deals with the Crown corporation. The Upper Nicola Band and Stk'emlupsemc te Secwepemc dropped out of the Federal Court of Appeal litigation, leaving four B.C. First Nations to fight the case. The Upper Nicola says in a joint news release with Trans Mountain on Friday that its deal represents a "significant step forward" toward addressing environmental, archaeological and cultural heritage concerns.

The Trans Mountain Expansion (TMX) project will twin the existing Trans Mountain pipeline and expand the Westridge Marine Terminal in Burnaby With the project now approved, the government is launching an engagement process over summer 2019 that will focus on information gathering and

The federal government ’s Environment Department did not consider the Canadian government 's .5 billion purchase of the Trans Mountain crude oil "The department will conduct consultations to solicit feedback," it said in one response, and will submit its review of inefficient fossil fuel subsidies "to a

The Canadian government gave the development corporation just over $5 billion to finance the acquisition of Trans Mountain, the report says. Trans Mountain Corp. must make regular interest payments to the Canadian government at a rate of 4.7 per cent.

The cash was provided to Trans Mountain in two sections: a $2.8 billion loan and a $2.3 billion equity investment. The interest on the loan must be paid from the pipeline's business activity, while the interest on the equity investment can be paid from a third-party subsidy, the report says.

Trans Mountain received $320M in government subsidies in first half 2019: report

  Trans Mountain received $320M in government subsidies in first half 2019: report VANCOUVER — The Trans Mountain pipeline received $320 million in subsidies from the Canadian and Alberta governments in the first half of 2019, says a new report by an economic institute that analyzes environmental issues. The money included $135.8 million in direct subsidies and $183.8 million in indirect subsidies that were not clearly disclosed to taxpayers, says the report by the Institute for Energy Economics and Financial Analysis. "ThisThe money included $135.8 million in direct subsidies and $183.8 million in indirect subsidies that were not clearly disclosed to taxpayers, says the report by the Institute for Energy Economics and Financial Analysis.

+ The Trans Mountain Pipeline Expansion Project is not in B.C.’s best interest says the BC NDP government . B.C.’s Attorney General David Eby, along with Environment Minister George Heyman made the announcement on Thursday at a press conference.

-The subsidy makes the price received by the producers higher too and thats another reason the curve shifts downwards. If the imports of a country exceed the exports, the government may provide subsidies to make goods cheaper to overseas markets.

The Canada Hibernia Holding Corp. covered the interest on the equity investment for the first half of 2019, representing a direct subsidy of $46.3 million, the report says.

Trans Mountain posted a $10.9 million loss in this reporting period prior to taxes, the report says.

However, the loss is subsidized in the consolidated financial report by the Hibernia corporation's earnings, amounting to another $10.9-million direct subsidy, the report says.

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Trans Mountain entered into private discussions with its shippers last fall to determine the tolls that would The toll schedules Trans Mountain has filed make it possible for the first time to examine the financial Within five years, the taxpayer-funded toll subsidy on the existing line will reach .4 billion.

+ Rerouting the Trans Mountain pipeline expansion to avoid a First Nation’s aquifer and ensuring another First Nation will always be immediately notified of a pipeline spill are among the steps Ottawa could take to address Indigenous concerns about the project. Story continues below.

Sanzillo also says the development corporation uses an "accounting gimmick" to obscure Trans Mountain's pension liability of $24.4 million. This is one more direct subsidy, he says.

Finally, the Alberta government reduced corporate taxes through a tax credit starting in January 2019. This policy action allowed Trans Mountain to save $54.1 million in taxes, yet another direct subsidy that the development corporation uses to turn the corporation's pre-tax loss into a post-tax gain, according to the report.

Sanzillo also identifies what he calls an indirect subsidy; the difference between the interest a private company would have charged Trans Mountain versus the rate charged by the Canadian government.

Canada's 4.7 per cent interest rate stands in contrast with the 12 to 15 per cent rate of return used by its former owner, Kinder Morgan, the report says.

Sanzillo used the lower figure, 12 per cent, to calculate that a private company would have charged Trans Mountain $302.1 million in interest in the first half of 2019. The Canadian government, meanwhile, charged it $118.3 million.

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+ UPDATE: 10:30 a.m. – The B.C. government says the Trans Mountain Pipeline Expansion Project is not in B.C.’s best interest. B.C.’s new NDP government says it will make an announcement Thursday morning regarding the controversial Kinder Morgan Trans Mountain Pipeline expansion project.

When the Quebec government and Ottawa stepped in to shore up a struggling Bombardier with cash for its prized CSeries aircraft, danger was lurking, according to William Mitchell, professor But there’s another story about subsidies in this intricate cross-border trade drama – and it is about Boeing.

That amounts to an indirect subsidy of $183.8 million for the first six months of the year, according to the report.

The report authors acknowledge that the Canadian government does not have to adhere to commercial standards.

"(The report) is about transparency and not meant to be a legal challenge to the right of the Canadian government to subsidize the pipeline project. It is a matter of dollars at risk that the Canadian taxpayer might absorb," it says.

When the authors added the $46.3-million interest payment and the $24.4-million pension expense back to Trans Mountain's financials, they concluded the pipeline corporation had a $67.1-million pre-tax loss and a $12.9 million loss after taxes.

The Canadian government plans to ultimately sell the pipeline. If it does so for a lower price than it paid for the infrastructure, it can legally forgive any debt that is left over, Sanzillo adds.

The Canadian Press was unable to reach out to the Department of Finance and Trans Mountain Corp. for reaction until the group's report was published Tuesday morning.

Laura Kane, The Canadian Press

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