RE: EDC14 Aug 2018 15:55
“IMO there is fkin 'UGE risk that UKGS may not happen.”
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Hi, LITC. Of course there is very much an element of risk, otherwise canny investors wouldn't be picking up shares in this exciting enterprise for only 36p today. However, I am not as inclined to describe that element as ‘UGE’ in the way that you might do for a number of reasons.
In the first instance there is the political capital to be gained from continuing to champion the Norther Powerhouse scheme, and as has been stated by politicians of varying of hues - not to mention key govt. depts. - our project is a key part of that. And as has already been evinced on numerous occasions also, show me a politician who isn’t quick to don the requisite tabard and hard hat and pitch up for a photo op and I’ll show you the exception rather than the rule.
But perhaps more importantly and setting aside what undoubted merit our project contains, we all know politicians - and indeed government - are notoriously profligate with taxpayer’s finances. As the National Audit Office (an agency specifically charged to scrutinise public spending) opines in the link I provided earlier for Roulette, as far as the UKGS is concerned “eligibility criteria are not strictly applied”. They go on to state that “The Treasury set 5 criteria to pre-qualify projects as potentially eligible for a guarantee but has not defined important aspects of 2 criteria, such as how to test whether projects need a guarantee and are of an acceptable credit quality (risk). The Treasury told us it chose to keep these criteria flexible as projects could find objective tests an onerous requirement. The Treasury does not document analysis against its criteria, for example evidence to demonstrate that projects make a positive contribution to economic growth. Three criteria were precisely defined: we found that 4 out of the 5 projects we examined met them, but the Treasury supported one £8.8 million project (SDCL EE) that cannot reasonably be described as meeting its ‘nationally significant’ test”.
So if UKGS has already supported at least one project that “cannot reasonably be described as meeting its ‘nationally significant’ test”, and they still have Treasury secured bonds and guarantees totalling £38.2bn of the £40bn made available, it’s hard to conceive that they are under any pressure to refuse. In fact, the opposite could quite reasonably be argued. And if the parameters within which they are free to make any determination are deliberately fluid, I’d argue that there is much in our favour when considered objectively.
Yes, this mine will be built with or without UKGS assistance. But when a politician can bath in any reflected glory by claiming to have played a key part in that at no real risk to themselves, I think we can be pretty comfortable believing that if it can be done it will be. And so, the odds are very much in our favour.
Regards,
per ardua ad astra
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