An SMS from Ernst. Short Messages Service (6)

Putin critizes EU Energy Policy (Source: Wall Street Journal)

Vladimir Putin, the prime minister of Russia, is not happy about the demands in the Energy Policy of the European Union. Yesterday he had a meeting with José Manuel Barroso where they discussed the subject. Here are some snips:

“We are speaking about property confiscation," Mr. Putin said during a joint news conference with European Commission President José Manuel Barroso, following a meeting between the two leaders, Russian ministers, and members of the commission. "Full implementation of [the EU's energy policy] will lead in an increase of energy resources prices in Europe," he said.

Earlier this month, EU leaders agreed on a fresh push to liberalize the EU energy market by 2014, putting into place rules on which they had agreed two years ago. A provision of the new rules requires energy companies that own their own pipelines to sell them, or else manage them completely separately, and allow access to the infrastructure by other operators that might also want to use it for transport.

The issue is creating tensions between the EU and Moscow because Russian gas giant OAO Gazprom has a key role in exporting gas to the EU and also holds stakes in some companies that run the grids, including in Poland and Lithuania. The Lithuanian government is forcing Gazprom to sell a 37% stake it owns in the country's gas distributor.

Roughly a quarter of the gas used in Europe comes from Russia, but some Eastern European countries like Bulgaria, Romania, Poland and Lithuania are much more heavily dependent on Russian gas.”

Putin is a cynical, but intelligent demagogue that understands quite well that the (eastern part of the) EU is very dependent on Gazproms (read: The Kremlins’) gas. I am afraid that José Manuel Barroso can stand on his head with his new energy policy, but the Kremlin will not do it: take it or leave it! And if Barroso argues to long, the gas price will go up a little bit more.

Kema capable of extracting water from smoke power plants. (Source: RTL News)

Good news from the environmental front. Kema, a Dutch company that started as the official Testing institute for Electrotechnical Materials in The Netherlands, is now a very versatile research institute.

They discovered a way to extract water from smoke gasses, coming from the chimneys of power plants. The water can be reused in the powerplants itself, but it can also be used as drinking water in very dry areas. Here are some snips:

3500 families could live from the water coming from an average 400 megawatt power plant. In Africa, where general water usage is lower, even 9000 families could live from this water. 

The consequences of this technology are far-reaching: “not only in environmental and energy savings, but also as a means for water shortage in dry areas, like in some African countries”, according to Kema CEO Pier Nabuur.

The used technology is based on the usage of small filters –  membranes – that extract the water from the smoke. During tests it became clear that at least 40% of the water in smoke gasses could be extracted. In advance the researchers reckoned with 20%.

This seems like a great technology to be used everywhere where power plants are and water is in short supply.

Parking in Dutch parking garages becomes more and more expensive

I already told you that there are no boundaries to the tax addiction of the Dutch government and municipalities have. Parking is another example (source: Financieel Dagblad; www.fd.nl):

Two out of three parking garages raised their price rates, sometimes as far as 20%, according to the Dutch retail trade association ‘Detailhandel Nederland’.

They did this not by raising the rates per hour, but by lowering the number of time units per Euro.  The Waterlooplein Parking Garage in Amsterdam f.i. now doesn’t count 4€ per hour, but 1€ per 12 minutes. In practice this is a raise of 20%, without people noticing it.

The investigators noted that the parkings are following the increased rates for parking on the street.

This is unfortunately the Dutch way: not thinking about (possible) reductions in the civil service of the average Dutch municipality, but just raising all kinds of hidden taxes. There is one word for it: disgusting.

Aegon’s issuance of shares succeeded (Source: Financieel Dagblad)

The raise of the share capital that Aegon announced last Thursday, succeeded. The insurer collected €903 mln at an issue price of €5.20.

Traders and analysts spoke of a ‘show of force’. Aegon will use the yield to return the remaining state support.

Aegon issued and sold 10% –  173 mln – new shares. The negative price reaction that often goes combined with the issuance of new shares, stayed away.

The Wall Street Journal is not very enthousiastic:

Aegon is a reminder the financial crisis ravaged Europe's insurers as well as its banks.

The Dutch life insurer surprised the market Thursday by raising €900 million ($1.24 billion) to repay the last of €3 billion in state aid it received in 2008. That's a positive step toward putting its business on a more normal footing. But Aegon's path to rehabilitation won't be easy.

Precrisis, Aegon's €24 billion market capitalization ranked it among Europe's bigger insurers. Its TransAmerica Life subsidiary remains one of the U.S.'s largest life-insurance providers. But in 2008, losses on investments in U.S. financials left huge dents in Aegon's capital base, bringing its shares down 70% and pushing it into a government bailout.

Aegon has since made good progress reducing its equity exposure and exiting capital-intensive businesses to release funds to repay the state. The market believed it could fund most of a final €2.25 billion state-aid payment due this summer through internal resources, including via the sale of its life-reinsurance business, TransAmerica Re. But while Aegon says it is now in discussions with a prospective buyer, negotiations appear to be bogged down by its complex legal structure and concerns over the quality of its back book.

It is a good thing that Aegon can pay back the state support, as this was quite expensive and reminds people of the crisis. However, the crisis is not over yet and there are concerns that the companies didn’t change their attitude enough to be ready for the next crisis.
Ernst