The Spanish and UK prime ministers have received letters from a group of international investors in Spanish renewable energy, urging Madrid not to go ahead with a second rounds of cuts designed to reduce subsidies for renewable energy.
In letters seen by the Financial Times sent to Mariano Rajoy, Spanish prime minister, David Cameron, UK prime minister, and the European Commission a group of 13 investors, which include HgCapital, KKR and Impax Asset Management have said an expected increase in taxation on Spanish renewable energy projects would destroy the value of their investments.
The Spanish government is under pressure to increase austerity measures to met a substantial budget deficit.
But the investors argue that a second round of cuts “will put the whole industry at risk of insolvency. Moreover, it will send yet another warning to foreign investors that Spain is no longer a safe place to invest”.
The letter to Mr Rajoy said that should the tax be implemented the investors would reserve the right to take action against the Spanish state under Spanish and European law, and the Energy Charter Treaty, which is designed to protect foreign energy investors.
The letter to Mr Cameron argues that if made, the changes “will probably have a detrimental effect on the UK meeting its low carbon and renewable energy targets, as if made these changes will irreparably damage investor confidence in European regulatory stability”.
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