Westinghouse, the nuclear-engineering company owned by the
British Government has just been sold to Japanese company
Toshiba for a price close to £2.8billion - almost twice the
original estimate.
One may question the wisdom of the government's decision to sell
given the current energy review which is likely to support the
building of new nuclear plant as a means to stem the growing
dependency on foreign gas.
It has been muted that one of the main reasons for the sale is
that China is interested in commissioning the type of reactor
produced by Westinghouse. This at first would seem a positive
reason for holding on to the company. However, the Chinese will
want the plant builders to sign indemnities which could lead to
almost limitless liabilities should there be any future
accidents. The UK government could not stomach such a commitment.
It's difficult, though, to envisage why the Japanese who are
known to be just as risk averse would contemplate such a risk
especially since their history with the Chinese is less than
amicable. Furthermore, their own experiences of nuclear
catastrophe, albeit during war, would suggest that they are
likely to be if anything, over cautious.
It's common knowledge that Japanese companies are eager to
expand in heavy industrial, higher value added businesses as
their traditional strongholds of electronics etc. are eroded by
the Asian tiger economies. The UK already has vast experience in
such sectors and it seems folly to relinquish control of one of
its key assets in this field.
If the UK economy were meeting the Chancellor's stringent
targets then perhaps the temptation of a £2.8billion treasury
lift would be less appealing than the long-term benefits that
such a state of the art business could bring to the UK. After
all, Westinghouse has come through some turbulent times in the
past when nuclear energy was out of vogue. But just as demand is
growing steadily with renewed turbulence in world energy markets
we appear to be giving away a huge potential revenue stream.
Perhaps the issue of limitless liability in China is just a
smokescreen to deal with a far more important issue much closer
to home - i.e. our economy is under performing and as our frugal
chancellor may be forced to concede that 'every little helps'!
Electricity4business's view This is yet another example of the
short-term view taken by a government that preaches to the world
about intervention to deal with environmental issues but when it
comes to domestic energy policy the free market reigns.
Impact on business electricity The decision to sell off
Westinghouse may have little impact on the current electricity
market. However, markets operate based on confidence in the
future and the sale of an asset which could add to the future
security of supply will certainly have an impact on the price of
electricity in years to come.
|
Categories 
