From Iceland — Magma Makes Another Offer

Magma Makes Another Offer

Published August 23, 2010

Magma Energy is trying a different strategy to convince Iceland that it means well – offering the government, and other Icelandic parties, a stake in the company.
As many are probably aware by now, Magma Energy used a Swedish puppet company to buy an almost total stake in Iceland’s third largest power company, HS Orka, earlier this summer. This was after telling the Grapevine last fall that they had no interest in buying a majority stake, and after telling us that the economic crash had nothing to do with their interest in Iceland – while telling another publication the exact opposite. General public discontent with the corporation, spearheaded by artist Björk Guðmundsdóttir, prompted the government to freeze the sale of HS Orka late last month.
While Magma Energy CEO Ross Beaty has contended that they just want to develop renewable energy in Iceland, and help create jobs in the unemployment-stricken Reykjanes region, many view Magma Energy as untrustworthy. Overall, the Leftist-Greens – which share coalition power with the Social Democrats – have been pushing for a reversal of the privatizing of energy companies which conservatives from the previous government championed.
On 18 August, a letter delivered to the Ministry of Industry from Magma Energy offered the government a stake in the company, and emphasized that he wanted to see other Icelandic investors – whether they were pension funds, municipalities, or individual investors – also buy themselves a stake in the company. Furthermore, he conceded that he was willing to shorten the current 65-year right to explore the Reykjanes region for geothermal energy.
Minister of Industry Katrín Júlíusdóttir told reporters that “a formal offer changes everything”, and that they would look into the matter better. But Atli Gíslason, who sits on the Industry Committee for the Leftist-Greens, said that the offer changed nothing for him – he wants to see energy resources in public ownership. This idea is one Katrín says would be “long and difficult, with reparations [to be paid to Magma],” adding that the government buying a stake is a preferable solution to her.

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