Latvenergo shops around for creditors

  • 2005-07-27
  • From wire reports
RIGA - Six bidders have joined the tender for a 200 million loan to Latvia's electricity utility, Latvenergo, that will be used to finance the company's development plan, said company spokesman Andris Siksnis.

The utility has yet to assess the bids and choose a winner. Ninety percent of the decision will depend on the interest rate, while 10 percent will come down to obligation costs, company officials said.

The repayment term has been set at 10 years, though it could be extended by another five years upon party agreement. The loan has been divided into 20 equal parts, each amounting to 10 million euros. A right to increase the loan on initial terms, namely without depreciating the price and term, has also been envisaged.

At present, Latvenergo's debt portfolio amounts to some 167 million lats (237.6 million euros).

Siksnis also said that Latvenergo had not ruled out asking the public utilities regulator to allow them to raise electricity tarifs. He said electricity prices could grow as soon as next year, although the rates have yet to be specified. Latvenergo, he explained, could request a tariff hike considering the increase in gas prices.

"It is no news 's we have been talking about it since the spring," he said, adding that the plan should be approved.

In early July, Latvenergo submitted a draft tariff project for thermal power production facilities TEC-1 and TEC-2, hoping to charge higher electricity and heating tariffs in the wake of the gas price increase. However, the growth in tariffs charged by TEC-1 and TEC-2 does not directly affect households and businesses.

The last time Latvenergo raised electricity tariffs was in January 2004 's by 12.7 percent. This included raising the basic household electricity tax by 15 percent from 0.039 lat to 0.045 lat per KWh. In June the public utilities regulator approved three tariff projects for Aug. 1, 2005 and the beginning of 2006 and 2007, depending on the volume of consumption.