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 governments 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. Its 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. Its 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 Chancellors 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! Independent electricity supplier, electricity4business, view this as 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. |
