Berzins: Estonian-Latvian power merger threatened

TALLINN - The saga of Estonia's energy quarrel continues. After years of debates, two weeks ago the government endorsed the main terms for the privatization of 49 percent of shares of Narva Power Plants Ltd. to the U.S. company NRG Energy.

But Eesti Energia directors remain defiant, and are refusing to sign the contract with NRG, citing terms under the present contract which they fear could lead them to bankruptcy. The terms state that the remaining 51 percent of shares in the company would remain the ownership of Eesti Energia, which would be obligated to buy electricity >from the power plants at above the market price for the next 15 years.

Further complicating matters is the announcement by Latvian Prime Minister Andris Berzins that if the Estonian government does privatize a part of Eesti Energia to NRG on the present conditions, there will be no merger of Eesti Energia and Latvenergo.

"In that case, a merger of Eesti Energia and Latvenergo is out of the question," Berzins said at a press conference on July 6.

Berzins has also ordered that operations connected with restructuring and privatizing Latvenergo be suspended until a referendum is held.

The parties of a working group preparing the merger of Estonian Energy and Latvenergo held a meeting in Parnu on July 6, but little about the conflict was disclosed.

Yet opposition may prove futile.

Economics Minister Mihkel Parnoja told the business daily Aripaev that no new discussion over the main terms of the NRG contract would be opened and the contract would be signed at the end of July by the directors.

"I can see no particular room for their amendment," he said of the primary figures of the NRG contract.

The Estonian steering committee will endorse the text of the main terms of the contract on July 13. It will then be translated, and signing will take place at the end of the month, Parnoja assured. He added that it is feasible that refusal to sign the contract could ultimately end in the firing of the board members, including chairman Gunnar Okk.

"I can personally declare that I have no intention of making it easier for anyone to make foolish decisions harmful to the citizens," commented Eesti Energia supervisory board member Toomas Luman, in a BNS report. Luman hinted at the possibility of his resignation.

Compiled by Jaclyn M. Sindrich from wire reports