RIGA - Both Riga Port and fuel trader Neste have signed a settlement dropping claims against each other in an international arbitration case erupting over conflicts with the port.
Riga Port previously sued Neste over failure to carry out its obligations under the port's land lease contract, arguing that Neste's importation volume of oil products was below the contract's provided level, thus causing a loss in un-received dues.
Neste's Finnish owners Fortum Oil and Gas Oy set May 13 as the deadline for solving the conflict.
If no settlement was agreed to by this date, Fortum said it would take the state to the international arbitration court for failure to protect its investments in Latvia.
The court ruled that Neste was to pay the port 1.01 million lats (1.56 million euros) in damages and also cover legal expenses.
After hearing about the lawsuit, Prime Minister Indulis Emsis created a task force to resolve the conflict between the port and the fuel company.
Riga Port board member Viesturs Silenieks told the Baltic News Service that under the new settlement terms Neste is not required to immediately pay the over 1 million lats in damages awarded by the court but has time to pay it off in the future.
"If you asked me whether the settlement is beneficial to the port, I would say 'no.' But I would say 'yes,' if you asked whether it was good for the state," said Silenieks, adding that negative publicity over the litigation could be more harmful in the long run.
"The main benefit will be avoiding further harm to the port's reputation," said the board member. The settlement with Neste could also help solve a dispute with Statoil, a fuel trader sharing similar complaints about the port.
Under the agreement, the port fee that Neste pays for reloading maritime cargos will remain unchanged at $1.00 per ton.
The port is also required to buy a railway section that Neste currently owns. However, if the company sells the railway, Statoil - operating the adjacent terminal - will have the right to first refusal, said Silenieks.
Furthermore, the settlement will solve conflicts between Neste and the company hired to renovate the pier, ABF.
Neste opened its terminal in the port in 1998. Last year it handled over 400,000 tons of oil products - up 60 percent from 2002.
The company estimates that it has invested a total of 33 million lats in Latvia and has paid 80 million in taxes.
