Eesti Energia ex-board member says oil factory investment irresponsible

  • 2020-03-27
  • BNS/TBT Staff

TALLINN – Andres Sutt, member of the parliamentary finance committee and former member of the management board of state-owned energy company Eesti Energia, on Friday criticized the government's decision to invest 125 million euros in a new shale oil factory  of Eesti Energia as irresponsible at the present time. 

"The government's decision to increase the capital of Eesti Energia by 125 million to establish a new oil plant is irresponsible -- it will not solve a single urgent problem of the Estonian economy. Today, the state must invest in short-term and temporary economic support measures having a quick effect, not in a speculative, high-risk, long-term investment for the establishment of an oil plant," Sutt, MP from the opposition Reform Party, said in a press release.

Sutt said that the short-term and long-term impacts of the coronavirus crisis on the global economy are very difficult to predict at this point and Estonia's budget shortfall and need for borrowing will be bigger than estimated by the minister of finance. 

"It is unclear where the additional 160 million euros in borrowings necessary for the establishment of the oil plant would come from. Those 125 million are much more necessary for the state to underpin people's incomes in the economy on the whole and finance business competitiveness measures. By way of comparison -- 125 million is the estimated amount of money needed per month for the Unemployment Insurance Board's wage support measure for people who have lost their job," he said.

Sutt said that the decision should have at least been postponed until the end of the crisis.

"It is also to do with how the management board and supervisory board of Eesti Energia have fulfilled their diligence obligations and assessed the risks related to the project in the context of the corona crisis," he said.

The opposition MP added that the economic necessity and outlooks of the plant should be assessed when the crisis is over, when we have some kind of idea of the pace of the recovery of the economy and the post-crisis state of play.

"The Estonian state currently has a big number of other needs and opportunities where so big an amount of money could be used more sensibly," Sutt said. 

The Estonian government announced earlier on Friday that it has authorized Minister of Finance Martin Helme to increase the equity capital of state-owned energy company Eesti Energia by means of a cash contribution of 125 million euros to enable the establishment of a new Enefit 280 oil plant by Eesti Energia.