Ottawa to sell Petro-Canada stake
The federal government will sell its stake in Petro-Canada within the next 12 months, Finance Minister Ralph Goodale said Tuesday â a transaction that could bring in almost $3 billion.
Goodale confirmed media speculation about the impending sale just hours before he was due to deliver the budget speech.
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In a three-paragraph statement, Goodale said the government would sell its stake in the 2004-2005 fiscal year, but "the precise timing of the sale is yet to be determined."
Rumours have been mounting since a media report on the weekend said Ottawa was considering selling its Petro-Canada (TSX:PCA)stock. Since then, there have been more stories citing unnamed sources.
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Three arguments have been advanced to explain the sale of government's 49.4 million shares (about 18.7 per cent) in the Calgary-based company:
- it needs the money;
- the timing is right because high oil prices have driven up the value of oil company stocks;
- the move would be popular in the west, where the Liberals need to bolster their support.
|1975 - Created by the Trudeau Liberals to protect and develop a Canadian presence in the energy sector1979 - The company discovers (with partners Chevron, Mobil and Gulf) the Hibernia oil field off Newfoundland1982 - Discovers oil at Valhalla, Alberta 1984 - Discovers Terra Nova oil field off Newfoundland1990 - Governing Mulroney Tories announce privatization of Petro-Canada1991 - First shares of Petro-Canada sold to public1995 - Ottawa reduces its interest in the company to 20 per cent2004 - Martin Liberals announce they will sell off remaining stake in company|
Petro-Canada stock has traded between $45.75 and $69.69 in the past year. It hit the high in late January.
A union that represents oil company workers called the move "bad business."
"Canadians want and need a role in our oil and gas industry, and now is no time to sell off Canada's gas station," said Brian Payne, president of the Communications, Energy and Paperworkers Union of Canada.
The company, created in 1975, was originally owned completely by Ottawa and was intended to allow the government to monitor the oil business.
Former Conservative prime minister Brian Mulroney sold off some of the stock in the early 1990s, then current Prime Minister Paul Martin, finance minister at the time, sold more shares in 1995.