Vilks warns on sanatorium purchase

  • 2013-09-11
  • From wire report

RIGA - The Latvian Saeima’s parliamentary investigative commission on the situation at the Kemeri Sanatorium on Sept. 3 decided to support Jurmala City Council’s decision to buy the sanatorium, although Finance Minister Andris Vilks (Unity) warned the commission that acquisition of the sanatorium by the Jurmala municipality may carry a risk priced at from 15-20 million lats, reports LETA.

The Municipal Loan and Guarantee Control and Supervision Council previously agreed that Jurmala City Council could receive a loan of 4,356,000 lats (6.2 million euros) to buy the sanatorium, provided that the sanatorium complex is free from all encumbrances, said the Finance Ministry’s Department for Supervision and Financing of Municipal Financial Activities Director Jolanta Plume.

Vilks said during the parliamentary investigative commission’s meeting that granting the loan to Jurmala City Council carried a very high probability of serious consequences because Jurmala residents may have a negative opinion of the council spending taxpayer money on the sanatorium’s maintenance. Judging from Jurmala City Council comments, it simply wants to keep the complex in running order until an investor shows interest in buying the sanatorium, if ever.
A plan of further action is necessary, but there is none, said Vilks, mentioning the risks the project carried. Plume said that this amount was possible if the Jurmala City Council opted to invest money in the Kemeri Sanatorium’s infrastructure, for instance, to allocate money for repairing the sanatorium’s roof, ensure uninterrupted heating and water supply, and cover other costs.

Jurmala Mayor Gatis Truksnis (Union of Greens and Farmers) replied in turn that the Municipal Loan and Guarantee Control and Supervision Council should not worry about Jurmala residents’ support or opposition to the city council’s plans. Jurmala residents will be able to evaluate the municipality’s performance during the next local government elections, whereas now the decision will be made by the democratically-elected Jurmala City Council, explained Truksnis.

The Finance Ministry’s legal expert Inta Liepa also said at the parliamentary investigative council meeting that Kemeri Sanatorium insolvency administrator Ainars Kreics’ draft agreement, offered for the Jurmala City Council to sign, said that the administrator would do everything in his power to cover part of the sanatorium’s liabilities. This formulation is too vague and currently it cannot be said for certain that the sanatorium will be free from encumbrances, noted Liepa.
Kreics then offered that the Finance Ministry present its version of the agreement for discussion, to which Plume responded that the Finance Ministry expected Kreics himself to make the necessary alterations to the agreement.
The property of the insolvent Ominasis Latvia, including the Kemeri Sanatorium, will be sold at auction on Sept. 24, Kreics previously said in a statement to the media.

The starting price of the company property will be 3,905,901 lats, of which will be partly applied value added tax. This will be the first auction of Kemeri Sanatorium.
The Jurmala City Council wanted to take out a loan from the State Treasury and buy the Kemeri Sanatorium without any auctions. However, the Municipal Loan and Guarantee Control and Supervision Council demanded the Jurmala City Council to submit information to ensure complete confidence in the chosen form of the transaction being legal and in accordance with regulations.