Any pulp future for Latvia?

  • 2005-04-13
  • From wire reports
RIGA - The future of the much-maligned pulp mill project is still uncertain, and whether a new investor will step forward depends on the fate of the existing agreement with Metsaliitto, Agriculture Minister Martins Roze said last week.

Finland's Metsaliitto walked out of the project in February after several years of having tried to convince Latvians that the project was viable and environmentally sound. Roze told the Baltic News Service that any breakthrough in the project, worth almost 1 billion euros, would depend on whether the agreement signed with Metsaliitto years ago was terminated.

If it is kept in limbo, as it is now, the project may never get off the ground, he said.

Commenting Metsaliito's decision to back out after years of efforts, Roze commented that the recent municipal election in Riga had been a major factor.

"I think that the film 'Dirty Pulp' funded by the Riga City Council pre-election budget had facts seriously twisted and presented with bias. It was not a decent thing, but they got what they wanted, and investors put a freeze on the project," said the minister.

"I doubt whether this was good for Latvia and Riga in general," he added. He said that with this kind of behavior it would be problematic finding other investors.

As an alternative, Roze suggested that the state could itself invest in the project. However, he added he was strongly opposed to the idea that Latvian forests should be used as collateral to finance the project.

Prime Minister Aigars Kalvitis has said the project should not be dismissed altogether.

Metsaliitto and the state had been close to reaching an agreement on the construction of the pulp mill, which was planned for the Ozolsala area in eastern Latvia near the Daugava River, but the State Environmental Effects Assessment Office prohibited the mill's proposed bleaching method since it posed a threat to the ecological system and fishing resources in the country's largest river.

Metsaliitto had promised to invest 900 million euros in the mill, which would have made it the largest investment project in Latvia 's and all the Baltics 's to date. The plant would have had an output of 600,000 tons a year and created 350 jobs.

The pulp mill project started in 2000 with formation of Baltic Pulp company. The Latvian state still holds 33 percent in Baltic Pulp, the name of the project. In 2003 the government decided to sell its stake but has not done so yet.