But the plan drawn up by the Economics Ministry will have to pass muster in a Parliament that last year declared privatization of the power giant off-limits because of its role in what has become known in Latvia as the "3 million lat" scandal.
At its March 2 session, the Cabinet of Ministers empowered the Economics Ministry to prepare new privatization terms for Latvenergo by early April.
Economics Minister Ainars Slesers has previously proposed selling up to 25 percent of the company's shares in a public offering to Latvian residents and Latvenergo employees. But Latvian lawmakers will have to sign off on the plan first.
Last year, after a contentious privatization process that had been slowed by bickering among political parties, the Parliament prohibited further talk of selling off the power company until its role in the "3 million lat" affair became clearer.
Latvenergo was involved in a cession deal with the failed Banka Baltija and an offshore company in Liechtenstein in which 3 million lats ($5.08 million) disappeared.
After countless parliamentary investigations, lawmakers are no closer to tracking down the money than they were a year ago.
The whole process is widely regarded as a heavily politicized one. During the privatization debate, some suggested dividing Latvenergo into certain branches, then privatizing each branch separately. Others have called for selling it off as a single entity.
But as long as Latvenergo remains in limbo, time is running out for Latvians with privatization vouchers, which expire in 2000.
"Latvian residents would already hold shares in Latvenergo if the issue had not been made so political," Janis Naglis, director of the Latvian Privatization Agency, told the Baltic News Service.
The Economics Ministry will have to consider both models of privatization and will need to estimate the company's value.
The management of Latvenergo has come out in support of having Latvians use their privatization vouchers toward the company.
"Irrespective of the fact whether privatization will happen this year or not, the question of redeeming privatization vouchers should be solved," said Latvenergo President Valdis Ginters.
Ginters has said he leans toward privatization now, but notes that the government should choose a privatization model that would allow the company to continue using cheaper electrical energy produced by the Daugava hydro power station.
While Latvenergo is renewing its systems, cheaper hydro energy allows it to save money on imported energy, thus the company needs to borrow less and can increase tariffs gradually.
"Under the current circumstances, Latvenergo can develop further and renew its systems with a very slow tariff increase," Ginters said. "If a solution is found that enables us to solve this problem, the board would support it."