Eesti Energia leaders sign NRG deal

  • 2000-08-31
TALLINN (BNS) - Eesti Energia board chairman Gunnar Okk and board member Lembit Vali signed an agreement Aug. 25 on principal terms of sale of minority shares in Narva Power Plants to the U.S. company NRG Energy.

Economics Minister Mihkel Parnoja affirmed that the agreement corresponds to the conditions set by the government by inking the document as well.

Okk said the decision to sign the agreement as it stands was made jointly by members of the board.

In his opinion, the likelihood of either the national power utility or NRG Energy abandoning the deal after the signing of the agreement on basic terms is very small.

"The agreement gives us 12 months and of course time will tell the outcome," Okk said. "The board's approach will in any case be cooperation-oriented and constructive."

NRG Vice President Ron Will, who signed the agreement on behalf of the company, said acquisition of a stake in Narva Power Plants has long been a priority of NRG's European operations.

"By signing the agreements, NRG reaffirms its interest in investing in Estonia and we want to be a good partner on the Estonian, as well as the Baltic region's, energy market," Will said.

The parties signed an agreement on subscription to shares in Narva Power Plants, a shareholders agreement, an electricity purchase agreement, an Estonian Oil Shale shareholders agreement, an NRG Energy Inc. guarantee, and basic terms of thermal power purchase agreement.

Apart from the basic terms, the parties signed an additional agreement that describes in detail procedures and principles of settling open conditions prior to the signing of final agreements. The additional agreement was required because talks between representatives of NRG and Eesti Energia, which started a week ago, failed to come to terms over certain provisions and the differences have to be resolved before the final financing agreement is signed.

After the signing of the basic terms, detailed agreements on construction, renovation and financing have to be prepared and concluded. Transfer of shares in Narva Power Plants will not take place until the financing agreement is signed.