Taxpayers are facing potential billions of dollars in losses on the sale of the Trans Mountain pipeline as the Parliamentary Budget Officer estimates its current value is less than the sum of its assets.

The pipeline could be worth between $29.6 billion and $33.4 billion, depending on several assumptions including what happens after the initial 20-year contracts expire, the budget watchdog said Friday.

Meanwhile, the pipeline's total assets amounted to $35.2 billion, liabilities were $26.9 billion and shareholder equity was $8.3 billion, as of Dec. 31, 2023.

If the pipeline was sold at the values estimated by the PBO, the proceeds would fall short of the government's equity in the project.

"After the outstanding liabilities are repaid, the remaining amount would be less than the shareholder’s equity. (Trans Mountain Corp.) would have to write off the balance of the equity and record a loss," said PBO analyst Jason Stanton in the report.

The shortfall range of between $1.8 billion and $5.6 billion is actually based on a best-case scenario, said Tom Gunton, professor of resource and environmental management at Simon Fraser University.

"Even under the most optimistic scenario, the conclusion is that the government will not recover its investment.”

The PBO's estimates assume the pipeline runs at full capacity, which isn't a given, and also uses a smaller discount rate than buyers would, said Gunton.

Under a less favourable outlook, including assuming only the 80 per cent of the pipeline that's under contract is used, and a steeper discount rate, the losses could swell to $15.2 billion in the PBO's model, he said.

The higher potential losses line up with Gunton's own estimates released in September.

In a report for the International Institute for Sustainable Development, he estimated the loss would be between $8.7 billion and $18.8 billion based on "the most realistic, likely assumptions."

"So bottom line: significant, significant loss to the taxpayer."

Earlier this week at a parliamentary committee meeting, Finance Minister Chrystia Freeland said she was "very confident Canadians will get a good deal" on the pipeline, and confirmed that she meant covering all of the public spending on the project.

The PBO said that whether the government makes a profit or takes a loss depends on what someone is willing to pay for it, noting the numerous variables at play.

The potential sale price will be influenced by the number of potential buyers, their cost in raising capital, when and how it will be sold, the market conditions at the time, whether it will be an arm's-length transaction, and whether certain groups will be prioritized in the sale, it said.