Vattenfall writedown wakens Nuon spectre

Vattenfall writedown wakens Nuon spectre
The leader of the Swedish opposition wants the government to appoint a crisis commission to probe energy giant Vattenfall's purchase of Nuon, which after Tuesday's writedown is worth 42 percent of its original price.

The government, meanwhile, said it was too early to assess the Dutch outfit’s true value and whether it was a sound investment on the part of Vattenfall to buy it in 2009.

“With the information that we have today, it is clear that it was a very high price. Whether it was a good or a bad deal, however, that we’ll have to evaluate in the long term,” Sweden’s Financial Markets Minister Peter Norman told the media on Tuesday.

“The price was, however, at that point, in line with other business deals, and was backed up by external reviewers.”

The 2009 purchase made Vattenfall one of the three biggest electricity generators in the Netherlands. But three years on, most of Tuesday’s writedown arose from the company’s Nuon operations, where many observers have said it overpaid for its Dutch subsidiary.

Norman underlined that the government had nothing to do with the board of the state-owned company’s decision to buy the Dutch power company, although credit raters Moody’s noted in 2011 that “The Swedish state exercises long-term active ownership over the company and views value creation as a paramount goal for Vattenfall”.

While then Enterprise Minister Maud Olofsson decided not to order a review into the board’s decision, she also did not discuss the issue with other cabinet ministers, nor with the other leaders of the four-party ruling coalition, Norman said.

Social Democrat leader Stefan Löfven said Tuesday’s writedown made the need to properly investigate the decision-making process more pressing than ever.

“They are incredibly big writedowns, so of course it’s serious, and the question of Nuon becomes relevant again,” Löfven told the TT news agency.

“It’s obvious to me that the government is trying to skirt responsibility, they’re trying to dodge the question and have tried to put the lid on the whole thing. But it is the government, and by extension the head of the government, which is responsible for this deal.”

Löfven said Norman’s claim that the rest of the government had not been consulted appeared to contradict a previous statement to the parliamentary committee on constitutional affairs, in which the government stated it had approved the purchase.

“It’s incredibly odd,” Löfven said. “And this is a deal in the 100 billion kronor scale… if it’s that easy for one single minister to make that decision… frankly, I don’t know which is worse.”

He further claimed that it was inconceivable that a board or a minister would be allowed to sign off on such a large deal without the knowledge of the prime and finance ministers.

“The head of the government has to speak out and explain what they were thinking,” Löfven said.

Vattenfall also on Tuesday announced that it was separating its traditional Nordic markets from its European business, saying that continued uncertainties about a single European energy market was partly to blame for the decision to write down its assets.

Financial Markets Minister Peter Norman did not rule out that the company would seek to sell its continental assets, stating that the question would be properly reviewed and potentially discussed in parliament.

“That question demands thorough analysis.”

TT/The Local/at

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