Icelandic State to Reclaim HS Orka from Magma Energy Skip to content

Icelandic State to Reclaim HS Orka from Magma Energy

According to the supplemental budget bill, the state treasury will hold the authority to acquire land from the municipality Reykjanesbaer on Reykjanes peninsula in the southwest which come with geothermal energy resources.


Geothermal energy on Reykjanes. Photo by Páll Stefánsson.

With the acquisition the state will come into ownership of all resources used by the energy company HS Orka for the Reykjanesvirkjun power plant, which the company rents from Reykjanesbaer, Fréttabladid reports.

The acquisition is said to be part of the government’s efforts to reclaim ownership of HS Orka from the Canadian company Magma Energy.

The acquisition price is ISK 1,230 billion (USD 10 billion, EUR 8 billion) and approximately 70 percent thereof is in the form of the write-off of Reykjanesbaer’s debts to the state treasury.

Björn Valur Gíslason, vice-chairman of the Icelandic parliament Althingi’s Budget Committee said the acquisition changes the context of the Magma affair.

“One could say that we are approaching the issue again by the backdoor. We have reclaimed control of it, even though it had to occur in this unpleasant manner for the inhabitants of Reykjanesbaer. A load of debt has been lifted off their shoulders but they lose these resources,” Gíslason said.

Reykjanesvirkjun has an energy production capacity of 100 MW and according to plans this will be increased by 40 to 50 MW. It has an operation license for up to 180 MW. The acquisition agreement was signed on Friday.

In related news, other municipalities are also considering selling assets to cover debts. The local council of Árborg, south Iceland, agreed on November 10 to map what assets, pieces of land, lots and real estate owned by the municipality can be sold, Morgunbladid reports.

Click here to read more about the Magma affair.


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