Ansip: forget about splitting up Eesti Energia

  • 2004-09-15
  • Baltic News Service
TALLINN - Newly appointed Economy Minister Andrus Ansip said on Sept. 13 that his predecessor's plan to break up the state-owned energy company Eesti Energia would not be carried out. "I find that it's not inevitably necessary to break Eesti Energia into pieces in order to end cross-subsidization," he said. "I do not regard this plan as normal or sensible."

The idea to break up Eesti Energia was put forward this spring by Minister of Economy and Communications Meelis Atonen, who resigned last week after his failure to find a solution for the island ferry issue.
According to Atonen, Eesti Energia should be broken up into independent companies to separate electricity generating from the power network's operation. The separate companies would be fully owned by the state, just like Eesti Energia, but not subordinated to one another. Atonen's plan didn't, however, call for extending any state support to the companies.
The plan triggered alarms among rating agencies, though Moody's Investor Service announced it would leave the credit rating it had issued to Eesti Energia unchanged. Moody's said that the compnay was small enough on the European scale and that splitting it into still smaller units could have a negative effect on its credit rating.
Standard & Poor's at the end of March revised its outlook on Eesti Energia's long-term credit rating to negative, citing the plan to divide the company.
Well-known Estonian industrialist Juri Kao, former chairman of Eesti Energia's supervisory council, also criticized the split. He said that dividing the company would neither benefit the economy on the whole nor increase competition.
Breaking Eesti Energia into parts would go against general business logic, which suggests that many activities can be conducted more efficiently in a group. Experts said the plan would not have been viable technically either, as it would have run counter to existing loan agreements.
After his resignation, Atonen mentioned the fight against monopolies 's including changing the arrangement under which shipper SLK has been operating subsidized ferries 's as his biggest achievement as minister.