An important and difficult decision does indeed face Shetland Charitable Trust (SCT); there, at least, I agree with the “Dynamic Duo” currently grasping the helm of the organisation tasked with stewardship of Shetland’s oil wealth.
If Shetland wants a wind farm Shetland should have a wind farm and like most people I want Shetland to prosper. The wind farm project offers considerable potential returns in exchange for the well-catalogued risks and drawbacks and the decision should be taken by the people affected – the residents.
Unless I return to live in Shetland I am unlikely to be affected either way and consequently join Tavish Scott, risking live bi-section by fence wire. I reserve the right, nevertheless, to comment on the tactics and statements of opposing factions.
In their published letter (No conflict of interest, SN, 21/6/12) Mr Ratter and Dr Wills conflate the award of planning permission by the Scottish government with shareholders’ completely separate decisions to invest as being the same thing; they say the Scottish government has approved the project so it WILL go ahead, with or without SCT involvement.
They say trustees must decide “whether to continue to invest in the Viking wind farm and earn the community several hundred million pounds (JT emphasis) over coming decades; or to sell the trust’s current shareholding now, for over £50m; or to do nothing.”
These claims are misleading and Shetlanders deserve better.
The true position, leaving aside possible legal action, is that Mr Osborne, UK Chancellor may “pull the plug” on this at any time, possibly, after our £6.3m have been committed and spent.
UK Energy and Climate Change Minister Ed Davey has reportedly told the ongoing Scottish Parliament inquiry into the SNP’s energy policy (100% Scottish energy from “renewable” sources by 2020) that an independent Scotland would have to foot its own energy subsidies bill and he condemned Mr Salmond’s policy as “akin to putting all your eggs in one basket.” From a Lib Dem minister that doesn’t augur well for Viking Energy (VE).
It has also been made plain to the same inquiry that investors will apply a “risk premium” to projected returns due to uncertainty arising from possible independence – the renewable energy boom, after all, stands or falls on English consumers’ (voters) willingness, or otherwise, to foot the ROCs subsidy bill.
With fuel poverty predicted to hit 50% of UK families this year and rising, given Scottish independence, how long could we depend on London Tories to bankroll Mr Salmond’s Scottish green Shangri-La?
So, yes, VE shareholders will run their slide rules over the figures many times before committing their money and anyone who imagines otherwise is delusional.
Of course, the promised benefits may accrue – it may turn out “alright on the night” however there is a real risk the finances could go pear-shaped at which point the £6.3m “investment” might be re-framed as “throwing good money after bad.”
So much for the certainty of earning “several hundred millions of pounds” implied in Mr Ratter and Dr Wills’ letter.
An alternative is to do nothing, either formally or by default (if, say, another meeting were to end “inquorate”), allowing SCT’s share to be diluted if the other partners were to proceed without SCT’s £6.3m; this would reduce the potential return to SCT and importantly, also, the risk should the project go badly. In this scenario the £6.3m would be safe.
The final main alternative as I understand it is that SCT can withdraw from the project now and sell its share for £50m – a substantial sum – and bank the money along with the £6.3m it decided not to risk.
This latter option would lead to some loss of control and investment returns should the project proceed, however, it would look pretty smart if Mr Osborne were, subsequently, to “pull the plug” and the project be abandoned.
These appear to be the options actually facing trustees and I’m glad I don’t have to decide myself. Perhaps Noel Edmonds will agree to guest-chair the meeting;-
“Trustees, deal or no deal, are you ready for “the Question”?”
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