The value of Shetland’s oil funds this week plummeted to its lowest level during the current financial crisis, down to a combined market value of £350 million.
As of 6th March, Shetland Charitable Trust’s investments stood at £135.3 million, while the SIC’s reserves were down to £214.1 million. It means the oil reserves have slipped over £120 million in value from the combined £472 million they stood at last May.
The SIC has an agreed policy of maintaining its reserves at or above £250 million at the end of each financial year, though it has agreed to temporarily draw down below that level to pay for the building of the £49 million new Anderson High School, before seeking a leaseback arrangement whereby the charitable trust’s property arm Slap pays for the building costs.
Both the council and the trust have responded to the savage economic downturn, from which it could take years for the UK economy to recover, with a “steady as she goes” approach and SIC head of finance Graham Johnston has repeatedly said it is too early to tell whether the reserves will fall below the minimum floor policy, as the precise value is only calculated at the end of the financial year in a few weeks’ time.
The charitable trust, meanwhile, continues to spend around £12.5 million a year on services, well above the £11 million which financial controller Jeff Goddard believes to be a “sustainable” level in the long term.