File photo contributed by KINDER MORGAN)

CPP Investment Board taking a look stalled Trans Mountain project

CPPIB has yet to begin a formal analysis or receive any confidential information

The federal government’s financial adviser has raised the possibility of the Canada Pension Plan Investment Board becoming involved in the Trans Mountain pipeline project but there’s been no political pressure applied, CPPIB chief executive Mark Machin told a parliamentary committee Monday.

The Toronto-based fund manager and its peers will likely take a look at the stalled Trans Mountain project because there are a limited number of investment opportunities of its magnitude, but CPPIB has yet to begin a formal analysis or receive any confidential information, Machin told Commons finance committee.’

RELATED: Key dates in the history of the Trans Mountain pipeline

His testimony came less than two weeks after the government announced it would buy the project for $4.5 billion from Kinder Morgan, to ensure the pipeline will be completed, with the intent of selling it at a profit in time.

Machin insisted, in answer to a question by Conservative MP Pierre Poilievre, that there had been no contact between CPPIB and Finance Minister Bill Morneau or any other member of the Liberal government.

But Machin said that CPPIB has been approached by Greenhill & Co., a small investment bank that has been hired to advise the government on selling the Trans Mountain project.

“I believe they’ve approached every — a lot of — funds domestically and internationally,” Machin said.

RELATED: Kinder Morgan wants Fraser Valley ALR land for work camp and storage yard

“At this stage, we haven’t done any analysis. We’re still evaluating the situation. Obviously, we have an obligation to investigate and to assess any major investment opportunity that comes along. And to fully understand all of the risks, all of the potential returns and understand the fit for our portfolio as well.”

The issue of political pressure is relevant because the CPPIB was set up in the late 1990s to be an independent manager of funds on behalf of the Canada Pension Plan, an employer and employee-funded retirement system.

As of March 31, when CPPIB’s financial year ended, it managed a fund with $356.1 billion in net assets, up from $316.7 billion at the end of fiscal 2017 and $278.9 billion at the end of fiscal 2016.

Morneau has predicted the Trudeau government will have no difficulty selling the Trans Mountain pipeline expansion project after uncertainty about its future is resolved.

The federal government’s hand was forced by B.C. Premier John Horgan, who is waging a court battle over the federally regulated pipeline, which would carry diluted bitumen from Alberta’s oilsands to a sea port near Vancouver.

Machin told the finance committee that the Canada Pension Plan Investment Board has a mixed track record with pipelines and will use its usual approach when deciding whether to put money into Trans Mountain.

In general, he said, a major factor to consider is regulatory risks — pointing out that CPPIB and its co-investors in a European pipeline were caught by surprise when the Norwegian government made a significant change in the tariff regime — or pricing structure — shortly after the deal closed.

“We’ve been in legal proceedings for a number of years now,” Machin said.

“That is part of the regulatory risk. It’s a really critical part of due diligence to understand regulatory risk for any infrastructure investment.”

The federal government decided to buy Trans Mountain after Houston-based Kinder Morgan threatened to walk away from the pipeline expansion due to political uncertainty, particularly because Horgan’s New Democrat government said it will do everything in its legal power to stop the pipeline because of unresolved environmental concerns.

Machin told the committee that the CPPIB hasn’t made a formal evaluation of Trans Mountain “purely because it’s at an early stage and we haven’t got any confidential information, or any information, to assess the situation yet.”

The Ontario Teachers Pension Plan — another of Canada’s independent retirement fund managers — indicated last week that it had a financial obligation to take a look at the potential of Trans Mountain.

Like us on Facebook and follow us on Twitter.

Just Posted

Growing in the semi-light

Here we are, several weeks into peak fire season and the sky is often overcast with smoke.

75 active fires and 8 wildfires-of-note in Cariboo Fire Centre Aug. 17

The latest update on wildfires, evacuation alerts and orders in the Cariboo Fire Centre.

Mayfield Lake evacuation alert lifted for 342 properties, 28 remain under alert

Progress on the fire has led to evacuation alert changes

Particulate matter levels in Williams Lake high enough to concern all

On a normal summer day levels would be between five and 15 micrograms per cubic metre. They are above 621.

Williams Lake RCMP asking public’s assistance identifying a male

He drives a black Ford F-150, has an owl tattoo

PHOTOS: B.C. city wakes up to darkness under wildfire smoke

The rest of the province also dealing with thick haze as smoky skies continue

Safeway union urges prejection of mediator recommendations

Says mediator asks for too many concessions

Fire chases B.C. crews out of their own camp

Crews in Burns Lake had to leave after a wildfire reportedly overtook their sleeping quarters

To address peacock problem, B.C. city moves ahead on trapping plan

Surrey’s new bylaw focuses on ensuring people no longer feed the birds, ahead of relocation

Hospitals to see ‘delays’ in care after losing Saudi students, health group says

About 1,000 Saudi residents called back to kingdom after suspending diplomatic relations with Canada

Bernier diatribe against ‘extreme multiculturalism’ boosts Liberal coffers

Party spokesperson Braeden Caley says online donations doubled, social media engagement quadrupled

‘Disjointed’ system hinders British Columbia First Nations in wildfire fight

More than 550 wildfires were burning in B.C. and crews were bracing for wind and dry lightning

Castlegar bridge designed by architect of collapsed Italian bridge

Riccardo Morandi designed the Kinnaird Bridge, which is part of Highway 3.

Federal government announces over $115 million to Royal Canadian Navy

Defence Minister Harjit S. Sajjan was at Victoria’s CFB Esquimalt to announce missile system upgrades

Most Read