Icelandic town to sue government if it stops Magma Energy deal?

The chairman of the Reykjanesbaer town council says he does not see how Magma Energy can pull out of the HS Orka purchase at this stage and added the town would consider suing the State if it interferes to cancel the deal.

The Financial Times reported this weekend that Ross Beaty, the president of Canada’s Magma Energy, is threatening to delay or even cancel buying HS Orka due to the political storm it is causing in Iceland. The government has stated it is determined to reverse the widespread privatisation of the energy sector.

Bodvar Jonsson, chariman of the Reykjanesbaer council, says the deal is important for his community and that it needs to go ahead. Under the deal Magma would buy the bonds that the local government holds.

“No, I can’t see that he can cancel it. Of course he seems to be getting tired of the feedback and the attitude of the Icelandic authorities against this company which is trying to invest here in the Icelandic economy and create jobs,” Jonsson told

He believes Geysir Green Energy, the seller of most of the shares in HS Orka, should look to sue Magma Energy if it decides to pull out of the deal at such a late stage, as the Financial Times said Beaty is threatening. For its part, Jonsson said, Reykjanesbaer would seriously look into taking the national government to court if it takes decisive action to stop the deal going ahead.

“If the State intends to interfere with this perfectly legal business transaction which conforms to Icelandic laws and rules, then Reykjanesbaer would certainly investigate its rights against the State. I think it is likely the same would be true of other parties selling their stake in HS Orka in the same way, like Hafnarfjardarbaer and Reykjavik Energy,” Jonsson said.

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