The opposition has officially demanded that the government postpone the privatization for another 5-10 years until their reservations are addressed. If the government's opposition parties views are not met they want a referendum to take place so the citizens of Latvia can decide the issue. The opposition parties met on Feb.8 to discuss their privatization concerns of Latvenergo and came to a decision trying to delay partial privatization of the power company.
The Latvian government was very eager in privatizing Latvenergo after the U.S. Secretary of Energy, Bill Richardson, held talks with the Latvian Minister of Economy and said that there are a lot of U.S. companies prepared to invest into Latvia's power market. The government sees privatization as the future of the power industry so Latvia can join the other two Baltic states in a joint Baltic power market, a view which Richardson shares.
On Feb. 11, the Ministry of Economy submitted a draft to the government which proposed that Latvenergo not be privatized on a whole but be broken up into four subsidiaries. The hydroelectric power stations will not be sold, but thermoelectric heating plants will have 49 percent sold to investors with the government keeping the remaining 51 percent. The high voltage network will not be sold and the Ministry of Economy had not decided whether to sell the transmission network and the technical center. The Privatization Agency wanted the transmission network to be partially privatized, but the government decided Feb. 15 not to proceed until the company has been restructured.
Latvian Privatization Agency General Director, Janis Naglis and Ojars Kehris, from the Economists Union, have stressed that Latvia should follow in the footsteps of Estonia and Lithuania and sell off the thermoelectricity power stations and the electricity distribution network.
"I think it is impossible not to privatize parts of Latvenergo and to freeze the motion will result in the downfall of the electricity power system currently in place." Naglis said.
The Social Democrat Leader in Parliament, Egils Baldzens, thinks that the government is rushing in too quickly with its proposal of selling parts of Latvenergo.
Baldzens said, "Privatization is absolutely not neccesary when Latvenergo is capable of investing 1 billion lats ($1.7 billion) into its own resources over a period of 10 years. To privatize Latvenergo would not be a goal that would benefit the citizens of Latvia."
Baldzens thinks there are too many unanswered questions in the proposal of privatizing Latvenergo. According to Baldzens, electricity consumers will be treated unfairly with the likelihood of differentiating tariffs across Latvia. His main concern is that people in rural Latvia will be paying higher rates for electricity than people in Riga.
"Smaller town centers will pay higher tariffs than populations in Latvia's larger cities," said Baldzens.
Ingrid Udre from the New Party Jaunas Partija, is also of the opinion that Latvenergo should not be privatized until careful thought is given to the matter.
Udre said, "If Latvenergo were to be privatized now we would only be a small power supplier competing in the European market against much larger power companies. We currently buy 60 percent of our power supply and if we were to privatize now, the Latvian people would just become users and buyers of electricity."
The last point that the government's opposition parties are uncomfortable with is that the Ministry of Economy has not put on paper the true worth of Latvenergo. Baldzens thinks all these reasons the government's opposition have against the proposal leave a big question mark on whether privatization is an affordable alternative.
The government approved plan, according to Naglis, is the only way forward for Latvenergo.
Naglis said, "The left is always the same anywhere in the world and they just want to hamper progress. I think that if they were in power they would themselves go ahead with privatization."
The Privatization Agency wants the Latvian government to move with modern trends in the European power industry and has grave doubts about an inclusion of a non-privatized joint stock Latvenergo into the Baltic power market. Naglis agrees with the Ministry of Economy's plan of taking small steps in the privatization of Latvenergo, unlike Lithuania which sold 51 percent of power supplier Lietuvas Energia..