It was announced yesterday evening that Reykjavik Energy has signed a loan deal with the European Investment Bank for around ISK 30 billion (EUR 170 million).
The loan deal was signed in a ceremony at the Hellisheidavirkjun geothermal power station in south Iceland.
The money will be used to finance development of the highly volcanic Hengill area near the towns of Selfoss and Thorlakshofn and where Hellisheidavirkjun is already located. The first priority of the project is the completion of part five of the Hellisheidavirkjun project, due to come into service at the end of 2011 with production of 90 megawatts.
The rest of the loan will be used to finance half of a new geothermal plant to be built at Hverahlid, which will also produce 90 megawatts – most likely for the new aluminium smelter at Helguvik, RUV reports.
Anyone know the terms and conditions of the loan? Was it a fair loan or would Reykjavik Energy have been better off selling some equity instead?
Surely, equity would have been better, but sometimes the equity can’t be floated when the ISK currency isn’t on the FX and ISK lost 60% of its value since 2007 peak.
And the loan would have to be repaid probably in EUR that means that Iceland central bank has their hands tied. The profitable parts of the government will be privatized, chopped up and sold off to predatory European Investment Bank. If the lender was Norway, there could have been some kinship sympathy.
Iceland probably won’t be treated badly as yellow or black people or Arabs.