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Gov't investments losing tens of millions of pounds per annum


craggy_steve

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OK, so the FTSE100 didn't do so well 2015-16, but isn't avoiding such losses what the investment managers get paid for?

It's difficult to know what the point of managed funds is at all. Given that the vast majority (in the region of 90%) underperform vs the indexes. And those that don't rarely repeat their success - making them almost impossible to pick anyhow.

 

And you get charged for the privilege.

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This is why I believe a significant proportion of reserves may be better invested - from the point of view of ordinary Manx people - in renewable energy development & exploitation

 

There's a large adjacent market & the island could only benefit by growing income for a future without normal jobs & exports

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This is why I believe a significant proportion of reserves may be better invested - from the point of view of ordinary Manx people - in renewable energy development & exploitation

 

There's a large adjacent market & the island could only benefit by growing income for a future without normal jobs & exports

So you object to the Pinewood investment but support investing into blue sky technology.

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Alf Cannan now states (P8 of Indy) that MUA debt now stands at £570M. It ain't going down...

 

It is going down. £570 million is total debt, including financial lease for gas pipeline and without netting off the bond repayment fund which - from memory - is around £45 million.

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As it doesn't pay tax the financial lease is totally irrelevant - it is simply an on-going commitment. The Utilities have multiple future commitments - paying for all sorts of things, they aren't put on the balance sheet as a debt.

 

Are the Utilities profitable - including the interest payments? Or are they still running up an account with the IOM Government to pay for the interest it is currently paying for them?

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Alf Cannan now states (P8 of Indy) that MUA debt now stands at £570M. It ain't going down...

 

It is going down. £570 million is total debt, including financial lease for gas pipeline and without netting off the bond repayment fund which - from memory - is around £45 million.

You're right. It's only down to just over half a billion quid. It was a bit picky of non-believer to point that out.

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How much is owed to non government sources?

 

£260 million is repayable when Isle of Man Government water and electricity bonds mature in 2030 and 2034 respectively.

 

In addition in 2002 MEA contracted to bring gas here in a spur of the UK-Irish natural gas inter-connector and MUA has to pay construction costs until 2023. "The finance liability represents the present value of expected future capacity payments discounted at an interest rate of 5.5% per annum", according to the annual report.

 

Nearly all the balance of MUA debt is due to government as it is now financed from government's Consolidated Loans Fund.

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Alf Cannan now states (P8 of Indy) that MUA debt now stands at £570M. It ain't going down...

It is going down. £570 million is total debt, including financial lease for gas pipeline and without netting off the bond repayment fund which - from memory - is around £45 million.

You're right. It's only down to just over half a billion quid. It was a bit picky of non-believer to point that out.

 

 

Fair point - perhaps I was being pedantic. smile.png

 

But it did not sound like the net debt is increasing by much, if at all, when the Treasury Minister and Chief Minister told Tynwald last week that sewerage rate would not increase by the rate previously planned, and more generally utility price increases would be limited to inflation.

 

And last October - when the MUA annual report was published - the media release stated, "the bond repayment fund – which is in place to repay the Manx Utilities bonds totalling £260m - has increased to £33m from £30m in the previous year, and the net debt has reduced by £11m – from £508m to £497m". See https://www.manxutilities.im/news/2015/oct/annual-report-financial-statements-201415/

 

It is important for government to communicate rather than to spin. The whole story should be told, surely?

 

Last week the Treasury Minister said in Tynwald:

 

"It goes without saying that it is fundamental that the Manx Utilities Authority has a robust and realistic plan to return it to a firm financial footing. However, this plan must also be responsive to the changes in economic circumstances and the Authority’s pricing strategies need to be reflective of this. Given the extent of these changes, however, I am commissioning an independent review of Manx Utilities’ financial position. The objective of the review is to assess the ongoing stability of its long-term financial plan and the assumptions that are underlying it. The review will be led by Treasury and we will be seeking expressions of interest from suitably qualified and experienced entities to assist us with the review. However, the economic circumstances that I have described have meant that the Manx Utilities Authority’s performance has been ahead of the plan. This performance level allows a brief pause in the planned increases in the sewerage rate without undermining the financial position of the Authority. Therefore, during the period where the review is being undertaken, the Council of Ministers has supported the Treasury’s request that: the sewerage rate increase be restricted to inflation only for the period 2017-18, and a motion in that respect will be brought before Tynwald in December; that the water rate maintains its increase with inflation in line with previous Tynwald approvals and policies; and that Manx Utilities consider its electricity tariffs for 2017-18, and make that announcement as appropriate in the New Year."

 

We should know soon as this year's MUA annual report should be published.

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How much is owed to non government sources?

 

£260 million is repayable when Isle of Man Government water and electricity bonds mature in 2030 and 2034 respectively.

 

In addition in 2002 MEA contracted to bring gas here in a spur of the UK-Irish natural gas inter-connector and MUA has to pay construction costs until 2023. "The finance liability represents the present value of expected future capacity payments discounted at an interest rate of 5.5% per annum", according to the annual report.

 

Nearly all the balance of MUA debt is due to government as it is now financed from government's Consolidated Loans Fund.

 

 

Who invested in the bonds? This I could never establish and have speculated in the past that it could be our own NI fund.

 

£33m in bond repayment fund (£3m was added in 14/15)

 

£227m net left on the bonds. Maturing in 2030 (£75m) and 2034 (£185m).

 

So 15 years at £3m per year (including the existing fund) can just about repay the £75m. Then only 4 years to find £185m.....good luck!!

 

Practically of course, these bonds will have to be refinanced, and maybe they'll get a better rate than 5.375% on the £185m

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