The Scottish Government has said that Scottish Water will be kept in public ownership and rejected calls for privatisation. Alex Salmond said:

“Is it really the smart thing to sell such a prize just as the world wakens up to the true value of plentiful and clean water? It would be like selling Saudi Arabia's oil reserves on the eve of the invention of the combustion engine”.

The comments came with the announcement of a new Water Bill for Scotland. First Minister Alex Salmond said Scottish Water would be given the power to become one of the largest generators of renewable electricity on its land, which runs to some 80,000 acres.

Mr. Salmond said the company managed a major resource which was rapidly becoming a commodity of great worth and that instead of handing over the profits and assets to private ownership, they would instead be used to help energise the Scottish economy. The Scottish Parliament was keen to ensure that “the mistakes of the past, when the takings from North Sea Oil and Gas were siphoned off elsewhere are not repeated”.

Only Shetland had been wise enough to benefit from the oil boom and now currently sat on a oil fund not far off £200 million, while the fund  created by Norway was closer to £300 billion. Mr. Salmond said that although it would be many years before revenues from offshore renewables reached that scale a start should nevertheless be made.

According to the First Minister, Scottish Water has identified potential for new economic activity in other business areas of some hundreds of millions in the medium term, while Scotland itself would become the world's first hydro-economy - exploiting water to help drive the economy.

Mr. Salmond continued:

“As Scottish Water expands its activities it will generate the additional revenue to become financially neutral to the Scottish Government's books.

“We are entrusting the management to build on their proven track record with a gradual expansion of functions, not to dilute their existing success, but to seize the growth opportunity in exploitation of the key commodity of the 21 st century and beyond.

So we will bring forward legislation to enable Scottish Water to play this role. Further, we expect water charges to continue to remain stable in real terms - the people's asset will move to becoming self-financing”.

Scottish Water Chief Executive Richard Ackroyd said the company’s success in reducing its carbon footprint and expanding into renewables and recycling was helping to put Scottish Water in a position where it could make a real contribution to the environmental challenges facing Scotland and that the business was willing to take on more responsibilities.