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Power customers like the state budget dairy cow

The government greedily supplies Statkraft's profits. Now they have received help from the Labor Party to squeeze half a billion more out of the company that was once to become Norway's power giant in the European power market.




(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)

Now, most of all, Statkraft is a dairy cow for a government that needs to raise money from the population in order to finance its promises of tax breaks to the same people.

In the third quarter of this year, Statkraft reported a profit of NOK 445 million before tax and NOK 205 million after tax. This is an increase compared to the third quarter last year, when the results were NOK 169 million before tax and NOK 74 million after tax, Statkraft said in its latest report on the situation in the company. Profits that the Government and the Labor Party are shedding after putting their teeth in.

The result of last weekend's budget reconciliation between the government parties and the Labor Party is most likely that the entire Board of Statkraft, with Chairman Terje Vareberg at the head, will resign.

After the government in its draft state budget for 2004 proposed that Statkraft should pay a dividend to the owner – the state – of 95 percent, the opposition reacted to the state's greed. Now one of the opposition parties, the Labor Party – which also likes to call itself a power party – has chosen to support the government's dividend parody by demanding even higher dividends from Statkraft. And there is a majority for that in the Storting.

In its original proposal, the government had proposed that Statkraft pay dividends of NOK 3,1 billion to the State. With the blessing of the Labor Party, Finance Minister Per-Kristian Foss is allowed to increase the dividend requirement by a further NOK 500 million in the state budget for 2004.

With this proposal, the Right through Aps's support proves that the state is an exceptionally greedy owner.

Such prejudice by a state company must have consequences, and the first is that Chairman Terje Vareberg takes his hat and goes. With him he gets the rest of the board.

Vareberg has previously criticized its owners for their policy towards Statkraft. Then he got answers from government representatives that if he was dissatisfied with the owners, he could only step down as chairman. The latest signals indicate that he will not go alone.

Vareberg's biggest problem is a completely unreliable owner. An owner who has no long-term plans for Statkraft. The board must constantly deal with the owner, but as the owner constantly changes strategy, the situation becomes hopeless for the board.

The situation in the Storting today is that a majority consisting of the Labor Party, the Socialist People's Party and the Green Party believe that Statkraft should be 100 per cent state-owned. The same parties have also announced that Statkraft will be strengthened financially by NOK 10 billion in order to be able to buy into the power market outside Norway's borders.

But Minister of Trade and Industry Ansgar Gabrielsen has not found 10 billion. He has chosen to postpone the case until the spring of 2004 with reference to the need for clarifications in relation to the EEA agreement. A majority in the Storting has previously believed that the state should not withdraw more than 50 per cent in dividends from Statkraft. The government also chose to ignore this, demanding 95 percent. The government has now got the Labor Party on its side, and the Labor Party now supports a higher dividend percentage than that of 95 percent.

The battle for Statkraft is a political battle in which a majority in the Storting wants the company in state hands. At the same time, the Conservatives are in the government and are doing everything to facilitate the transformation of Statkraft into a public limited company, which may eventually be partially privatized over the same load as Statoil.

Statkraft is well run, the company makes solid profits, but the board is not given the opportunity to lay out long-term strategies. With equity that is not allowed to grow, it becomes difficult to manage the company in a demanding market. The company has an estimated market value of up to NOK 50 billion and is the country's fourth largest company after Statoil, Hydro and Telenor. Statkraft is a giant in the Norwegian power market, where they are no longer allowed to buy anything significant. In the Nordic and European context, Statkraft has little financial weight. There is little compared to the large European power companies.

In order to grow, Statkraft must go out into the world according to the restrictions it has had on the domestic market. But the financial muscle Statkraft needs to grow in the European market, the Conservatives and the government refuse to give the company.

The political battle over Statkraft is not primarily about the dividend percentage, but about a lack of control. Which could mean a very difficult future for Statkraft.

And a new board must also live with it.

Statkraft's group shop steward, Odd Vanvik, stated earlier this autumn that Minister of Trade and Industry Ansgar Gabrielsen is doing everything he can to thin the company as much as possible, and create unpredictability.

In 2002, Statkraft became the big winner in the power market with a profit that was previously only reserved for Swedish Vattenfall, points out the editor of KraftNytt.no, Kjell Rønningsbakk.

He further says that the paradox is that a significant part of the gain from the extra electricity bill of NOK 12 billion from last winter has ended up in Statkraft – and 3,1 billion of this money appears as dividends to the state.

This clearly shows that the electricity bill works as an extra tax that is printed when the cold is strong enough and the reservoir filling is low enough.

Thus, the biggest winner after last year's power crisis is not in the management of a power company. He is Norway's Minister of Finance. And as if that were not enough, Minister of Finance Per-Kristian Foss has also raised three billion in extra VAT as a result of the high power prices.

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