May 20 2010

Magma Energy Takes Over HS Orka

PipelinesThe third largest power company in Iceland, HS Orka (Southern Peninsula Power Company) is in the process of being sold to the Canadian company Magma Energy. Magma already owns 46% of the stocks in HS Orka and is now set on buying Geysir Green Energy´s (GGE) 52% stock, leaving only 2% of the company in Icelandic hand´s. Magma´s takeover of the company started in july of 2009 when Magma bought an 11% share from GGE. Around the time of the purchase, Ross Beaty, Magma’s director stated that the company did not plan to become predominant in H.S. Orka or meddle with the management of the company’s power plants. Now, barely a year later, those words seem long forgotten.

Members of the left wing in the Icelandic government and environmentalists have been criticising the sale, focusing on the fact that a national resource is slipping out of the populations hands and citing laws forbidding investors from outside the European Economic Area (EEA) to own part of Icelandic power companies. But nobody seems to mind the fact that even before the sale of GGE´s share, the majority of HS Orka had already fallen into the hands of foreign investors, though only partly. How so? GGE owned 52% of HS Orka. Íslandsbanki (formerly Glitnir, formerly Íslandsbanki) owned 40% of stocks in GGE, so whereas 95% of Íslandsbanki was in the hands of foreign creditors, many of whom are from outside of the EEA, aproximately 20% of HS Orka was belonging to these foreign creditors. On top of that can be added the fact that all board members of HS Orka at that time were under Íslandsbanki´s control, the bank now headed by former president of Landsvirkjun (National Energy company) and environmental terrorist, Friðrik Sophusson. Like stated above, Magma owned 46% of HS Orka at that time, making the total foreign ownership of the company aproximately 66%.

The local industrial lobbyists, the same who have constantly obsessed about nationality in their endless rants about the importance of workplaces hiring Icelandic workers first ever since the collapse of the financial system, and who buy advertisments for millions every year campaigning for the locals to shop Icelandic products, have revealed their bottomless hypocricy yet again with their position of defence for the foreign investors. Whereas it´s all important where the labor force comes from now that the country´s experiencing recession, the cash flow can come from anywhere in the world, as long as it means more industrialisation, more jobs for the locals and more environmental harnessing.

At the same time they discount the claims of resources being sold to foreign comapnies with their redundant statements about the resources not belonging to HS Orka directly but are being “rented” out for 65 years alongside the sale. One of the oppositions solution focuses on reducing that time to 40 years, which makes no sense or difference as the deal is still the same; Magma will own 98% in an Icelandic power company and have control of it´s resources for decades to come.

Iceland is now treading a path so many country´s have been forced down before it. After a sudden boom in the financial sector, which a handful of people turn to their benefit ending up bankrupting the rest of the country, the national resources are now up for grabs for anyone with a monetary injection into the system. Takeovers of this sort have been looming over the horizon ever since the former collapse-government struck a loaning deal with the International Monetary Fund (IMF) in the wake of the financial crash. Such deals have seldomly ended with anything else than a total and utter plunder of national resources and a litteral enslavement of the inhabitans through strict bugetary conditions and hostile takeovers layed down and orchestrated through or around the IMF. Icelandic officials, in their usual fit of denial, all swore against any conditions or risks of losing any resources to international companies being bound to the IMF loans. But it didn´t take a long time for the first conditions to break into the daylight as IMF constantly held back evaluating Iceland´s case until Steingrímu J. Sigfússon, minister of finance, signed a memo stating that the Icelandic government recognises and takes responsibility for the debts the collapsed Landsbankinn (National Bank of Iceland) formed in the U.K. and Netherlands through the infamous ICEsave accounts.

Read more about Magma´s sneaky takeover through these older news from the Saving Iceland website:

Canadian Company Wants to Take Over H.S. Orka:

Magma’s Purchase of H.S. Orka Approved – Three Arrested in the City Hall:

Blame Canada? – Geothermal Energy, Swedish Shelf Companies and the Privatisation of Iceland: