“Caruna is using its customers to cover its grid acquisition costs while siphoning profits out of Finland”
Jarkko Eloranta, the president of the Trade Union for Public and Welfare Sectors (JHL), has lashed out at Caruna for what he estimates is a horrible arrangement to cover the costs of its recent power grid acquisition and siphon its profits out of Finland.
“An individual customer has no choice but to pay because power grid operators have a natural monopoly in their area of operation,” Eloranta argues in a blog entry.
“Fortum sold its power grid to Caruna, which is mainly owned by foreign equity investors, in 2013 for a price of 2.55 billion euros. Caruna is currently using its customers to cover the costs of the acquisition with interests,” he states.
- Increases in electricity distribution charges could be capped, says Rehn (02 February, 2016)
Eloranta points out that such arrangements are typical of the sales and privatisations of important public utilities. “The buyers are making taxpayers and service users pay for services and infrastructure they have already paid for,” he slams.
“The case of Caruna is made even more outrageous by the fact that the company pays hardly any taxes on its profits to Finland,” adds Eloranta.
Caruna, he points out, has transferred its profits from Finland to the Netherlands as payments for interests on internal loans in order to ensure its operations in Finland remain loss-making. “Caruna reported profits of more than 50 million euros in 2014 but only paid taxes of 1.6 per cent to Finland,” he highlights.
“It utilised internal arrangements to ensure its Finnish operations showed a loss and, therefore, had to pay no taxes to Finland. The Netherlands, meanwhile, is a well-known tax haven in the EU that makes generous tax agreements with multinational companies,” he continues.
The increases in electricity transmission charges adopted by Caruna have whipped up controversy in Finland in recent days.
Prime Minister Juha Sipilä (Centre), for example, has criticised the tax planning of Caruna. “Overall, the tax planning is repulsive,” he said in an interview with Iltalehti earlier this week. “We may yet be able to intervene in this under-capitalisation,” he added.
Eloranta urges policy-makers to take into account the consequences before continuing the sales and privatisations of public utilities.
“The Government of Sipilä is intent on opening up more public services to market forces. This is what is taking place in the fields of rail transport and health and social care. The health and social care market is worth tens of billions, and private operators see vast potential there. One would hope that the long-term consequences are assessed before another massive wave of outsourcing and privatisation,” he writes.
Aleksi Teivainen – HT
Photo: Jussi Nukari – Lehtikuva
Source: Uusi Suomi