Former board member says Alcoa welcomed Landsvirkjun CEO’s exit

A former Landsvirkjun board member says Alcoa likely welcomed the departure of the Icelandic power company’s chief executive, warning that his exit could weaken Landsvirkjun’s position in upcoming electricity negotiations. The comments were reported by mbl.is.

Álfheiður Ingadóttir, a former minister who served on Landsvirkjun’s board for 14 years, made the remarks during mbl.is’s Spursmál programme, where she and former finance minister Sigurður Ingi Jóhannsson discussed the company’s situation after Hörður Arnarson left the post and clashed with its board.

Renegotiating electricity contracts with Alcoa Fjarðaál, an aluminium company, is one of Iceland’s biggest national interests at present, Álfheiður said. Alcoa Fjarðaál is Iceland’s largest electricity buyer. Its consumption amounts to 26 per cent of the country’s electricity production and 36 per cent of Landsvirkjun’s generation.

Landsvirkjun sells about a third of its electricity to the company, Álfheiður said, but receives a considerably smaller share of its electricity-sale revenue from it.

The current contracts with Alcoa run for 40 years. A window to negotiate electricity sales for the following 20 years opens next year, and preparations for the talks have been under way at Landsvirkjun for a long time. Álfheiður said the work had relied heavily on the chief executive, the finance director and the finance department. Both executives have now left.

“I’m certain there was great joy in Alcoa’s camp when Hörður stepped aside,” Álfheiður said. She said he had taken a firm approach in negotiations with international aluminium companies and was known for it.

Álfheiður also said political involvement in Landsvirkjun had clearly increased. Hörður became chief executive in 2009, when the company was heavily indebted, partly because of extensive power-plant construction. During his leadership, Landsvirkjun renegotiated contracts with major electricity users and strengthened its financial position.