Industry minister laments Iberia’s fortunes since its merger with BA

Industry, Energy and Tourism Minister José Manuel Soria doesn’t hide the fact that he is not over the moon about how Iberia has fared in its merger with British Airways but denies he is at odds with the management of the carrier, which is in the throes of a painful restructuring process involving close to 4,000 job cuts.

In a wide ranging interview with EL PAÍS, Soria also defended his department’s controversial reform of the electricity sector — which will lead to hard-strapped consumers paying more for energy — and his equally controversial support for fracking in an attempt to ease Spain’s heavy dependence on imported fossil fuels. Below is an extract of some of Soria’s comments.

“I believe the change that has taken place in Iberia is heading in the right direction. However, if you ask me about revenues you only have to look at its accounts to see they have fallen while those of British Airways (BA) have risen. And routes? They have fallen. And those of BA? They have risen. There are people who, in order to fly to Buenos Aires, have to go through London; this wasn’t the case before,” the minister says.

Soria insisted the reform of the electricity sector was needed to tackle the ongoing problem of the so-called tariff deficit, the difference between the costs to produce electricity and the regulated prices consumers pay for it. The accumulated shortfall currently stands at 26 billion euros.

“I understand perfectly that households, companies and investors are not happy with [the reform], or even the government itself because a part of [the burden] is borne by the state budget,” he says. “But it’s the only thing that can guarantee the stability of the system. There was an alternative: don’t take measures and raise electricity bills by 42 percent. The economy can’t allow for that luxury.”

Soria insists that the reaction of international investment funds and potential investors in Spain to the reform has been positive.

The minister also rejects doubts that Spain will manage to meet the target set by the European Commission of 20 percent of energy needs coming from renewable sources by 2020. He points out that 50 percent of total investment in the energy sector in the first six months of this year has been in renewables. “What concerns me is the security of the energy supply and our reliance on hydrocarbons,” he says. “That is why we have to try to give ourselves the opportunity, with all the environmental guarantees to see if there is gas or oil,” he adds, referring to fracking and oil exploration in the Canary Islands.

Soria’s stance toward fracking has been informed by what the United States has done, although he acknowledges that the potential risks deriving from this activity in more highly populated parts of Spain are greater than those in the Arizona desert.

“I look at the United States. They had a tremendous problem with deindustrialization, of energy dependency. Obama, using a very pro-environment discourse, has got into fracking and has created jobs, with gas prices at 3.5 dollars, compared with 12 in Europe and 18 in Japan. The debate ends there.”

Soria also says he has no objections in principle against the use of nuclear energy.