Navigator admits cutting investment in Portugal due to energy prices

  • ECO News
  • 17 September 2021

The rise in energy costs is already making the company lose ground to its European competitors and it's also taking away "space to invest and grow" in Portugal.

It is with “enormous apprehension and concern” that The Navigator Company is looking at rising prices in the Iberian wholesale market (Mibel), with the company headed by António Redondo admitting to ECO that this rise in energy costs will affect business growth and also reduce the volume of investment in Portugal.

“We already feel an increase in costs that will naturally translate into less competitiveness of our value proposition in the international market. We have less room to invest and grow, not only because we are investing our funds in these additional costs, but also because possible investments in Portugal become less attractive,” acknowledges an official Navigator source.

The Setúbal-based group reminds us that the rise in electricity prices at Mibel has its origin in a very significant escalation in natural gas prices, which, as a necessary fuel for industrial activity, “also has a very strong impact on the cost structure” of the paper mill.

And besides already “losing competitiveness in a very significant way” against the global competition – it was Portugal’s third-largest exporter in 2020, with sales to over 130 countries – the same source warns that “inevitably it will also have a significant impact on consumer inflation, which will lose purchasing power and reduce consumption”. This month, the former Portucel increased paper prices in Europe by up to 6%.

In response to the records recorded in August and September, the Portuguese government has announced that it will implement several measures to partially mitigate this problem for large industrial companies, such as the creation of an electro-intensive consumer statute, the promotion of remote renewable self-consumption or compensation via the Environmental Fund for increased CO2 costs.

However, the companies still do not know the details and deadlines for implementing these proposals, although Navigator considers that “the most likely is that the government’s measures will mitigate only a small part of the high negative impact that has already occurred”. Meanwhile, it counters by saying that, “the rise in electricity and gas prices is certain and the short-term outlook does not point to a resolution of this situation in the market.”