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Estonian Energy enjoying privatization

  • 1998-08-06
  • Kairi Kurm
TALLINN - Since falling into private hands in 1997, Eesti Elektrivorkude Ehituse AS (Estonian Electrical Network Construction Ltd.) has started enjoying the benefits of being the first fully privatized structure under the umbrella of Eesti Energia (Estonian Energy).

The company has operated under different names for the last 49 years. Andres Vainola, a member of the Elektrivorkude Ehituse board, said the company has been competing for various tenders. The company has to compete with not-yet privatized structures of Eesti Energia in addition to privatized competitors such as AS Harju Elekter, AS Elektritsentrum, AS Gaur and others.

Most of those competitors are state owned companies. Some have suggested this means the competition is not quite fair. In state companies, the movement of resources is not always clear.

Vainola thinks otherwise.

"The competition has been fierce and fair," said Vainola. He says the privatization of Eesti Energia, however, is necessary and right.

The market share of Estonian Electrical Network Construction Ltd. is about 12 percent. The sales of the construction market in 1997 was around 9.5 billion kroons ($655 million), about 10 percent of which was formed by the energy construction market.

The company mainly operates on the Estonian market and it has plans to expand into Latvia, Lithuania and Russia.

In 1997, the company won tenders for the installation of fibre-optical lightning protection cable in Lithuania and Latvia. Lithuanian Energy and Latvian Energy ordered the works. The company also won a local competition organized by the operators of mobile communications that require the contractor to build communication poles in Estonia for AS EMT (Estonian Mobile Phone), AS Radiolinja and AS Ritabell.

In 1997, the company worked on Minilink-15 communication systems for the Estonian Railway and radar masts for the Estonian Border Guard based on the order by the State in co-operation with the French company Thomson-CSF were completed.

One of the best indicators of last years' success was the increase in the share of private enterprises in the total turnover, from 32 percent to 39 percent compared to 1996, which points to the competitiveness of their construction services. The share of Estonian Energy and its enterprises fell at the same time by 6 percent to 49 percent.

In 1997, the company gained a 23 percent growth in turnover through a more efficient usage of inner resources. The Estonian construction market grew even faster.

On the administration side, the objective of the company is to establish a balance between primary activities and auxiliary activities in order to decrease and cut costs on the administration apparatus.

The company plans to invest 12 million kroons this year. The predicted sales and profit for 1998 are 128 million kroons and 8 million kroons. The figures in 1997 were 106.8 million kroons and 6.6 million kroons respectively.