From Iceland — Reykjavík Energy Director: Did Not Understand Financial Situation

Reykjavík Energy Director: Did Not Understand Financial Situation

Published March 30, 2011

Power company Reykjavík Energy (OR) is having to face some tough realities as they deal with belt-tightening measures from its largest shareholder, the city of Reykjavík.
As the Grapevine reported, OR is hundreds of billions of crowns in debt, which has made many foreign investors in the company nervous. City officials met yesterday to come up with a solution, and proposed to lend OR 11.3 billion ISK, provided the company freeze new investments or construction projects and reduce their operations solely to their “core work”, i.e., providing electricity and hot water to people.
OR chairman Bjarni Bjarnason, in an interview on the television show Kastljósið, spoke candidly about the company’s financial situation. He said in part that they would not even have been able to pay their staff this summer if nothing had been done; that the company had experienced a complete “drying up of funds”.
To make matters worse, he said that the company’s financial situation wasn’t even clear until late last January. At that time, it became apparent that the company could not rescue itself. When asked why it had been so unclear where OR’s finances stood, he replied that he did not know.
When the questions came around to what constitutes OR’s “core work”, Bjarni was asked specifically about heavy industry – in particular, aluminium smelters. To this, Bjarni replied, “I do not consider it in harmony with OR’s role to take a chance and sell power to a third party – heavy industry or another private party – and put all the foundation work of the company in danger.”

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