Privatization proposal for Riga utility sparks wave of emotion

  • 2006-01-04
  • From wire reports
RIGA - The privatization of Riga's heating company triggered a minor war of words between a foreign official and a government minister.

The row started when at the end of December Dalkia, a French utility, sent the Latvian justice minister a letter warning that the government's refusal to sell off its stake in Rigas Siltums (Riga Heating), a municipal utility, might be perceived as discrimination against a foreign investor.

"We know our rights stated in the Latvian legislation. Currently we have a reason to believe that the Latvian government is going to violate them," said Dalkia's local representative, Guntars Kokorevics.

The company, which is a minority shareholder in Riga Heating, asked Justice Minister Solvita Aboltina for an explanation of the legal arguments behind the Economy Ministry's decision to reject Dalkia's proposal for the company's privatization.

"We want to understand the change of the government's position, the arguments behind it," the representative said.

This was followed by a statement by the French ambassador that questioned the government's sudden decision not to privatize the company.

By refusing to sell its shares in Riga Heating to Dalkia, Latvia has created a "paradoxical situation, considering the publicly stated intention of the Latvian government to complete the privatization process started in 2004," Ambassador Michel Foucher wrote in a letter to Diena, Latvia's leading daily paper.

"Why should the government deny Riga residents a solution of heating network management that has already proved itself elsewhere?" the French ambassador wrote. "If the French proposal is rejected, it would be a quite strange message sent by the Latvian government to France and European investors."

The response from Latvian officials was immediate.

"That Latvia is pressured by France on what should be privatized is totally unacceptable. Latvia is a sovereign state, and we can decide on our own what to sell off and what not," Economy Minister Krisjanis Karins told the Baltic News Service on Dec. 29.

Karins said the government would hold firm on the stance that the state-held shares in Riga Heating should not be sold off and that this has nothing to do with the fact that Dalkia wants to acquire the asset.

The government was scheduled to review the privatization proposal on Jan. 3, though Prime Minister Aigars Kalvitis was quoted as saying that it would most likely be rejected.

The Riga City Council owns 49 percent of Riga Heating's share capital, while 48.9 percent belong to Latvia's Privatization Agency and 2 percent to Dalkia City Heat.

Riga Heating manages 76 percent of the total heating power necessary for the Latvian capital.