Criticism increases around pulp mill

  • 2001-03-01
  • Nick Coleman
RIGA - Forestry companies last week criticized the secrecy surrounding negotiations between the Latvian government and its Scandinavian partners over plans to construct a giant pulp mill near the town of Jekabpils in eastern Latvia.

The business daily Business Baltija this week quoted unnamed sources saying that the Finnish forestry company Metsaliitto and Swedish consortium Sodra, the state's partners in the Baltic Pulp company, are pushing for logging rights on 350,000 hectares, or one-third, of Latvia's state-owned forest land. This prospect has alarmed smaller companies fearful of being sidelined in the timber market, a relatively lucrative industry that accounts for more than 40 percent of Latvia's exports.

Andris Plezers, executive director of the timber producers association Latvijas Koks, said interested parties should have greater access to the negotiations.

"Latvia very much needs this pulp mill, but our association objects to the fact that we don't know the conditions under which private investors are entering the Latvian market. At the moment we think the pulp company wants 35 percent of the state forest, which would be OK, but if they go over this amount local businesses will suffer. We're hearing so many contradictory things and no one really knows what's happening."

Jukka Laitinen, chairman of Baltic Pulp, said that the precise size of the company's logging concession is still being negotiated.

Arvids Ozols, state secretary at the Ministry of Agriculture, rejected suggestions that making the state a part owner of the company constituted undue interference in the market.

"We'd be happy for this company to be entirely private but Latvia is a young democracy and the state is the biggest forest owner. This kind of state participation is widely practiced in the European Union, for example in eastern Germany. The mill will conform with EU regulations."

Morten Hansen, an economist at the Baltic states' Eurofaculty and the Stockholm School of Economics, described the state's part ownership of Baltic Pulp as "strange."

"What's the need for government intervention at a time when they're trying to privatize so much else? These kinds of things are usually well dealt with by the private sector," he said.

A precise location for the pulp mill has now been chosen in the Ozolsala district near Jekabpils. A final decision on the location will depend on the results of an environmental impact assessment, expected to begin in March and to take 1.5 years.

Investment in the project is expected to total 513 million lats ($827 million). Production may begin in 2005, a Baltic Pulp spokesman told the Baltic News Service.