Serious liabilities await for taxpayers after British Energy sale
Posted on Friday, March 26, 2010
The sale deal of UK government's stake in British Energy to French Utility EDF has landed into soup. Reason: Taxpayers are complaining that their interests were overlooked by government during the process. The alleged failure on behalf of government is being taken as the dream of construction of UK's ten new nuclear stations will never become a reality.
The report made public by Public Accounts committee stated that UK government failed to secure a guarantee from EDF relating to the construction of nuclear stations without offering any subsidy while its stake sell of 36 percent in the month of January, 2009 for a staggering £4.4 billion.
According to cross-party group of MPs, which keeps the track of government spending, has pointed out the systemic weakness in the Department of Energy and Climate Change (aka DECC) modus operandi as it could result in severe burden on public in the form of taxes.
That's not all, the next to come in firing line was none other than Shareholder Executive who was blamed for being immature and spending £4 million on hiring services of investment advisers from UBS bank, when internal expertise was available.
Interestingly, people are surprised at government's stance on the whole issue. Despite being in knowledge of the fact that there is a possibility that EDF will not be constructing stations with or without subsidy, government does not have any answer to the question that how future energy demands of the country will be met.
The committee is also not sure of the fact that market will be able to deliver investment in nuclear power and renewable energy in such circumstances. The committee pointed out the inability of government in carrying out the systematic and timely assessment of risk, which is extremely important in such deals.
Although, EDF has made it clear that company is well-equipped to construct nuclear power stations in the UK and does not need any subsidy from government's end.
Meanwhile, DECC has stated that on Wednesday it will release a report that will capture the subject of market's ability to draw investments in low-carbon power generation which also consist of new nuclear plants.
Market experts believe that the committee will recognise the gesture of government's interference which is required to help premier energy companies namely Centrica, EDF, RWE npower and E.ON nuclear stations.
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