RIGA - Latvijas Gaze (Latvia Gas) has said it would decide in September whether to start legal proceedings against the state over plans to liberalize the gas market.
Board Chairman Adrians Davis told the press on July 15 that shareholders would be informed about the government's decision at a council meeting in late September and then they would have to decide about a further course of action.
The government has suggested tentative plans to liberate the gas market in 2010 even though Latvia Gas is guaranteed a monopoly position until 2017. Davis said that liberalization was a "nice-sounding word," but the government should also take into consideration the likely effects on the economy and consumers when making decisions. He criticized the government for complying with the EU requirements blindly, without evaluating them.
He said that, in his opinion, de-regulating Latvia's gas market would not bring any benefits to consumers.
In June Parliament passed amendments to several laws in order to introduce the EU requirements on opening up the country's natural gas market in 2010. Contrary to the government decision, LG insisted that the gas market should be liberalized in 2014.
According to the company's privatization agreement signed in 1997, Latvia Gas was given exclusive rights to supply and store gas in Latvia until 2017. The company was willing to give up three years of its monopoly period and promised that in that case it won't take court action against the state, but the latter refused to compromise.
Latvia could face sanctions from the EU if it drags its feet in liberalizing the natural gas market. The EC could decide on Latvia's request for putting off liberalization this fall.
The company's largest shareholders are Germany's Ruhrgas (48 percent), Russia's Gazprom (34 percent) and Itera Latvija, a Latvian subsidiary of the Russian concern Itera, a Gazprom-owned company, which holds 16 percent.
Davis said that the company expects to post earnings of 10 's 12 million lats (14.2 - 17 million euros) for 2005, lower than last year. He explained that the Latvia Gas' profit depends on the lat-dollar exchange rate, with appreciation of the dollar cutting into the company's profit.
