The supply of electrical power at stable and competitive terms is vital for the viability and competitiveness of Hydro’s aluminium operations. If the government’s original proposition concerning reversion, as now recommended by the energy and environment committee of the Storting, goes through unchanged, it will be almost impossible to carry out major new investments in Norway's aluminium industry.
On Tuesday morning it emerged that the majority of the energy and environment committee is backing the government’s proposed new legislation regarding the reversion to the Norwegian state of power rights. For the most part, the proposal is simply an extension of the current Act.
In a previous round of consultation, Hydro took a critical stance to the government proposal, and their skepticism has not been lessened now that the bill has received support at the committee stage.
“If we are going to produce aluminium, we need power to be supplied on terms that will remain constant. Hydro will be greatly affected by the proposed amendments to the hydroelectric power regime. Roughly two-thirds of Hydro’s power production is subject to reversion under the provisions of the current legislation. The new proposed legislation is designed to further limit the possibility of Hydro owning its own power resources. This contrasts starkly with our needs. No other arrangements can adequately replace the power we produce ourselves,” states Executive Vice President Jørgen C. Arentz Rostrup, who heads Hydro’s Energy business area.
Setback for K6 on Karmøy
“Hydro has worked long and hard to put into place all the prerequisites for an expansion of the Karmøy aluminium plant, known as the K6 project. If the Storting adopts the committee’s proposal, perhaps the most important prerequisite is taken away,” says Rostrup.
The committee’s report on reversion represents an important clarification, and the proposed K6 expansion at Karmøy can now be formally dealt with by Hydro’s decision-making bodies.
”Unless new elements are put forward to ensure power for this project – and we cannot see any – it will be very difficult, not to say impossible, to say that there will be a Karmøy expansion.”