From Iceland — Government Seeking to Shorten Magma Energy's Lease

Government Seeking to Shorten Magma Energy’s Lease

Published May 18, 2010

The Icelandic government is hoping to shorten the length of time that Canadian company Magma Energy will own 98% of Iceland’s third largest power company, HS Orka.

As reported, Magma Energy already owned 46% of HS Orka when it approached the Icelandic company Geysir Green Energy with an offer to buy that company’s 52% stake in HS Orka.

This sparked a great deal of resistance from within the Leftist-Greens, with MP Ögmundur Jónasson pointing out that the sale and privatization of natural resources is contrary to their entire platform.

Speaking to Vísir, Minister of Industry and Social Democrat Katrín Júlíusdóttir tried to show the bright side of the situation, saying that it was the conservative alliance of the Independence Party and the Progressives who privatized utilities, so it matters little if the owners live in Iceland or overseas.

She then said she was optimistic that she could get Magma Energy to shorten their lease from 65 years to 40 years. She said that Magma Energy received the idea positively. A final decision is still pending.

Speaking to television station Stöð 2, Magma Energy CEO said that in the long run, his company’s ownership will bring many returns for Iceland. He commented that he felt energy companies charge heavy industry too little for power, and that he would quite possibly charge a higher rate for electricity to aluminum smelters such as the one in Straumsvík.

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