Latvian officials pan push against power privatization

Jul 06, 2000

RIGA (BNS) - Latvenergo electricity utility council chairman Ojars
Kehris said July 1 he was not certain that the voters, who signed in
support of the bill about keeping the energy company under state
ownership, had studied the document in detail, because the public
discussion focused only on the issue of possible privatization of
Latvenergo.

Speaking about the bill in respect to the month-long signature
campaign in June, Kehris voiced his surprise over a provision under
the bill. Draft amendments to the energy law, supported by those who
signed the petition, prohibit the use of Latvenergo hydro and thermal
power plants, electric power transmission, distribution and
telecommunication networks and equipment as a security for any loan
or other liabilities.

"I am surprised that under the proposed amendments, the company will
not be able to use its property as a guarantee for loans. If the
company may not guarantee loans itself, a question arises on who will
provide those guarantees," Kehris said.

Does it mean that loans taken by Latvenergo will have to be
guaranteed by the state at the expense of people and other companies,
Kehris wondered.

He said that this provision under the draft bill was ill-considered
and "those, who signed in support of it, probably hardly understood
what it was all about."

During the campaign voters were called upon to sign the petition in
support of the bill to express their position as regards
privatization of Latvenergo or retaining of the state ownership over
the company, but the bill in question was not discussed.

Kehris said Latvenergo had to operate under statutory procedures and
hoped that Latvian lawmakers, when deciding about amendments to the
energy law supported by voters, would also take into consideration
the company's viewpoint.

Latvian Privatization Agency director general Janis Naglis also said
the bill was a failure, and Latvenergo operations were not likely to
benefit from it.

Naglis said an alternative bill had to be prepared for the
referendum, as the current wording was "ill-fated, even harmful to
electric power consumers, as it is not only about non-privatization
of Latvenergo, it is also about not having any investors."

"If such law is adopted, it may be the end of Latvenergo," Naglis said.

Draft amendments to the energy law, supported by those who signed the
petition, call for Latvenergo to remain a whole electric energy
supply company and hydro powerplants, thermal power plants,
electricity transmission, distribution and telecommunication network
and equipment owned by the electricity utility are strategic energy
supply facilities of national importance.

The bill says that those facilities may not be transferred into
possession or ownership of any third parties or pledged to secure any
loan or other liabilities.

Moreover, the draft law establishes that Latvenergo may not be
privatized, and all shares in the company are to be held by the
state. The same terms also apply to the company formed as a result of
reorganization of Latvenergo.

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