Government should stay out of Terasen sale

VICTORIA - I can see why people are worked up about the takeover of Terasen Inc. by U.S.-based Kinder Morgan.
There are reasons to worry , and to feel betrayed. It was only two years ago, as Terasen successfully lobbied the government to lift Canadian ownership requirements, that CEO John Reid downplayed worries about a takeover. "Our head office is firmly planted here in Vancouver, British Columbia, and we have every intention of keeping it that way," he said then.
But still the government is right to keep its hands off the deal, and resist the call to use it as a weapon in the softwood battle.
First some history.
Terasen, known as BC Gas until two years ago, was a publicly owned natural gas distributor for 50 years.
In 1988 the Socreds decided to privatize the utility. But the Vander Zalm government was worried that foreign ownership, or control by any small group of owners, would hurt B.C.'s interests. So it passed a law limiting foreign ownership to 20 per cent of shares, and barring anyone from owning enough stock to exercise control.
The law lasted for 15 years, until the Liberal government repealed it in 2003. There was no real debate or discussion. The two-person NDP opposition was focused on bigger BC Hydro issues in the same piece of legislation; Liberal MLAs asked no questions.
The Liberals said the change was needed because government shouldn't be setting ownership rules for a private company. The new freedom would make it easier for Terasen to raise money through stock issues, it said.
They are not bad arguments, but it might have been a tough sell if people were paying attention. More than 6,000 British Columbians have written letters opposing the Kinder deal.
Terasen is big in the pipeline business, moving oil from Alberta into B.C. and to five U.S. states. (It does not actually produce any oil or gas.)
But the corporation's core business is delivering natural gas to about 880,000 B.C. households and businesses. It's a monopoly, regulated by the BC Utilities Commission, and the company's performance and rates are important to more than half of British Columbians.
They have some right to be concerned. Gas distribution in B.C. was hugely important to Terasen. To Kinder Morgan, it is just another profit centre. Terasen, as one of B.C.'s largest corporations, was conscious of its image and reputation. Kinder Morgan will be much less interested.
But the time for such concerns is past.
The law was changed. Kinder Morgan made an offer to buy the company, obeying all the rules, and the shareholders have accepted. The deal is worth about $700 million in gains to Terasen shareholders. (About half the shares are held by pension and mutual funds and other institutions.) It would be wrong to leap in now.
The sale still has to be approved by the BC Utilities Commission, which will look at whether it is in the public interest. A federal review is also under way. British Columbians will have to count on those reviews establish that their interests can be protected.
The New Democrats, with Corky Evans in the lead, have been calling on the government to stall the sale as a pressure tactic in the softwood dispute. Richard Kinder, the acquisitive CEO, is a friend and supporter of George Bush. Holding up the sale for 90 days could encourage Kinder to tell Bush that energy matters more than softwood, they argue.
It's appealing, but not the right action. The delay would penalize Terasen shareholders for something they nothing to do with, and send a message that B.C. is a risky place to do business.
Especially because a 90-day freeze is unlikely to have any impact, leading to pressure for a longer and longer delay.
Basically, this is just another corporate takeover, changing one group of self-interested shareholders for another.
And that's really not the government's business.
Footnote: The sale means Vancouver loses another corporate head office. On a per capita basis, B.C. already trails four provinces - including Manitoba - in the number of head offices located here. It's a significant problem. Corporate head offices provide increased business and career opportunities, and tend to offer more support for community projects of all kinds.