Former SNP deputy leader tells Scot-Govt to set up all-energy new Scottish Energy Corporation on same model as Norway’s Statoil

Jim Sillars
Jim Sillars

The SNP-led Scot-Govt should establish a new state-owned Scottish Energy Corporation comprising semi-autonomous units operating in oil and gas (including ‘fracking’) and renewable energy sub-divisions.

This is the alternative – and enhanced – model put forward by Jim Sillars, former deputy leader of the SNP.

His call follows the policy announcement last week by Nicola Sturgeon, MSP, the current party leader and Scottish First Minister, which aims to establish a not-for-profit Scottish (renewable) electricity provider.

Dubbed ‘Sturgeon Power’, this state-owned utility would compete in the open market with privatised commercial giants, such as Glasgow-based Scottish Power and Perth-based SSE – both of which operated across the UK.

Speaking on the eve of the ‘final’ vote in Holyrood today (24 Oct 2017) to permanently ban onshore oil and gas exploration in Scotland, Sillars said: “There is a socialist case for the public ownership of essential utilities such electricity, gas, rail, and banks, where all of these have a profound influence on economic performance and the lives of people.

“There is also a case for a more effective use of land through public policy, without going to the suicidal extent of state nationalisation.  

“Prime Minister May has accused the electricity giants of ripping off the public; which invites consideration of a different form of ownership.  As for public owned rail, Scotland’s internal rail system is already there, owned by the state of Netherlands.

“That brings me to the new policy on energy provision that Nicola Sturgeon sprang on the SNP conference to the immediate delight of the delegates.

Norway's Statoil corporation also works in renewable energy, and recently started generating electricity from the world's first floating wind farm, anchored in the Buchan Deep off Peterhead.
Norway’s Statoil corporation also works in renewable energy, and recently started generating electricity from the world’s first floating wind farm, anchored in the Buchan Deep off Peterhead.

“Let me be clear, the idea of delivering cheaper energy to the 900,000 people in fuel poverty is an excellent one.

“But I know that the ‘not for profit’ part cannot mean that.  I think Nicola means ‘profit made will not be distributed to shareholders, but will be invested to make the company more competitive and successful’ – at least I hope so. 

“But that company will be joining a regulated market, dominated by giants, in which there can be no special treatment for the new Scottish company because the Holyrood Government does not have the powers to make it so.  Will the eventual size and structure be able to survive?  We need the detail before judging its potential.  To damn it just because it will be in public ownership is unwise.

“I would prefer a much bolder model, in which ‘profit’ would be one of the objectives. 

“My model is a Scottish Energy Corporation as a holding company, with divisions engaged in fracked gas, oil, and renewables, which would, like Statoil, act on their own when appropriate, and in partnership with private companies when such would better achieve the objectives.  

“Ideology as a guide, not as dogma, would govern. Nye Bevan’s NHS is a good example of a public good delivered by public-private partnership. We have NHS public paid staff in hospitals, with self-employed GPs, private suppliers of drugs, and private pharmacists dealing with prescriptions.

“Ever since oil was discovered in the North Sea it has been Unionist policy to deride its importance.

“The joy manifest in many quarters with the price fall since Alex Salmond’s White Paper <on Scotland’s Independence> underlines the sad fact that all eyes, Unionist and Nationalist, have been diverted from what should be considered in the national interest.

The Glasgow-based British National Oil Corporation was set up in Glasgow in 1975 by the UK government. It was privatised as Britoil plc in 1982 under the then Tory government and subsequently acquired by BP in 1988.
The Glasgow-based British National Oil Corporation was set up in Glasgow in 1975 by the UK government. It was privatised as Britoil plc in 1982 under the then Tory government and subsequently acquired by BP in 1988.

“Since Mrs. Thatcher dispatched the public owned British National Oil Corporation, on purely ideological grounds <to the private sector> the discussion about oil has been on the tax revenues –  whereas in Norway the primary focus has been on making a lot of money from selling oil.  

“No matter whether it has been a Right -wing or a Left-wing Norwegian government in office, none has contemplated privatising Statoil, preferring to see the state’s sovereign wealth fund growing steadily. Nor has Statoil been averse to engaging in a partnership with a private concerns.

“My model would see the Scottish Government buying an oil company, either wholly or in majority part, borrowing against the asset to do so. There are a number of buying and selling transactions in the North Sea on a regular basis, with some bought at a relatively modest cost.

“That would give us two advantages: for the first time we would have a public practitioner’s window into the business, and secondly we would see profits with extraction costs varying from $15-20 a barrel while the price has been bouncing between $56-58. 

“As things stand now, the Scottish nation doesn’t own a bucket of the black stuff which is the real wealth maker.

“The other components of this new Scottish Energy Corporation – fracked gas and renewables – would be in partnership with the private sector which has the necessary technical expertise and knowledge.

“Thus profits would be made to invest in the Corporation to seek expansion, while providing business and households with cheap energy. 

“Whether the tax take on these activities would go to Holyrood or Westminster is an interesting question.

“While that model promotes a public owned/involved contribution to tackling some of our energy and human requirements, and finds an important place for Scotland in an industry off and on its shores, there is no reason why the Right should condemn it, especially as there are successful examples all over the world from democratic Norway to autocratic Saudi Arabia where the historic development of ARAMCO is instructive.

“I have become a bit like Deng Xiaoping with his analogy of the cat whose colour didn’t matter as long as it caught mice. If something can be better delivered by the private sector, under market competition, then let it be so.”

24 Oct 2017

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