Off the wire

PRICE HIKE: Latvia's state-owned electricity company Latvenergo wants to raise rates 10 percent beginning next year. Company President Karlis Mikelsons told reporters that the electricity utility is forced to raise tariffs because of higher supply costs and large company investments. Mikelsons said the new tariff calculation scheme submitted to the Power Supply Regulatory Council will include reduced rates for socially vulnerable groups and industrial consumers. Thus the tariff hike will most sharply affect households, the commercial sector and small production businesses, said Mikelsons. He said the new tariff rates will also be lower if electricity is used for heating. Currently the general electricity tariff charged by Latvenergo is 3.9 santims ($0.06) per kilowatt hour.

FARM TO FARM: The Estonian beverage company Osel Foods, Estonia's third largest juice producer with its Aura brand, plans to bring out a cheaper line of juices in the fall to be marketed mostly in rural areas. According to market researchers Profindex, Aura occupies the third place among juice brands sold in Estonia after Gutta and Solo with an estimated market share of 12 percent. The launch of the new brand requires no investments, with the only extra costs coming from raw materials and package design, said Osel Foods Board Chairman Kuldar Leis. "In money terms, sale of the new juices should add from one-fourth to one-third to current sales," he said. The Aura line, which features nine different flavors , is a solid market leader in Tallinn. Sales of the Aura line, launched last October, amounted to 6.85 million kroons ($372,000) in the first quarter of this year.

ATOMIC: The Lithuanian commercial bank Snoras has acquired a 10 percent stake in the Belarusian bank Atom Bank, its first equity investment in a foreign bank. Atom Bank is being set up by Belarusian and foreign investors in Belarus' free economic zone as a universal bank offering banking services to corporate and private investors. The bank has an authorized capital of around 1.44 billion litas ($360 million). "There are still a lot of unfilled niches in Belarus' market. Also, it offers good expansion opportunities," said Remigijus Bartaska, deputy director of the Lithuanian bank's treasury and investment division. Officials at the Belarusian Embassy in Vilnius said 25 commercial banks operated in Belarus as of June 1 this year. Currently, Snoras has representative offices in Russia, Ukraine and Belarus.

FINNISH TAKE BITE: Finland's leading food retailer Kesko OYJ has developed a project for the investment of 122.7 million euros ($107.63 million) to expand operations in the Baltics. Kesko plans to expand operations in the food retail sphere in Estonia and Latvia, buying and developing food supermarket chains and financing retail operations. About 50.4 million euros are expected to come from the European Bank for Reconstruction and Development. The EBRD is also to invest in Kesko's real estate companies in Estonia and Latvia, buying 20 percent of the share capital and granting an operational loan of 10.9 million euros. Operations will be undertaken in a chain of food supermarkets, a chain of DIY/hardware stores, an agriculture machinery store and a food logistics center in Estonia.

NEW JOBS IN NARVA: The Kreenholm sewing factory based in Narva in northeastern Estonia launched on June 11 the first production line in a new facility. The new plant has an area of 14,000 square meters and will provide 400 jobs, the regional newspaper Pohjarannik reported. Construction of the facility began in October and it was handed over to the sewing factory in March. Plans are to complete installation of equipment in July. Nadezhda Sinyakova, director of the sewing factory, said it will soon be working in three shifts. "We have a great need for qualified sewers. The shop works currently in one shift, but in July, after equipment is installed, we'll already start work in two shifts," she said. Building and equipping the new facility cost Kreenholm 56 million kroons ($3.04 million). "Kreenholm is giving serious attention to investing in the development of production, but the sewing factory is not the firm's largest project. The largest investments, from a World Bank-sponsored loan, will be made in the Kreenholm Frotee (Kreenholm Terry) finishing facility," Sinyakova said. The Kreenholm sewing factory makes more than 700 different products, including bedclothes, household goods, special clothing and goods for children. Cloth diapers exported to the United States account for a large part of the factory's sales.

ANOTHER ESTONIAN VOTE: An opposition-sponsored motion of no confidence in Economy Minister Mihkel Parnoja was rejected in a 42-42 vote by the Estonian Parliament June 14. A minimum 51 votes in the 101-seat chamber was needed for the motion to be carried. The opposition blamed Parnoja for scandals related to the privatization of Estonia's railway company Eesti Raudtee and irregularities in the engine fuel market. One specific reason for the vote was an alleged misprint in fuel quality regulations signed by Parnoja that allowed the business of vendors of low-quality fuel and excise-tax evaders to bloom. It is the second time Parnoja has survived a no-confidence vote. The previous failed motion last August cited the minister's poor performance in the privatization of the country's large power stations.

LOANS FOR ROADS: Estonian lawmakers on June 14 approved a loan of 45 million euros ($39.47 million) from the Nordic Investment Bank to finance a project for repairing state highways. The borrowed funds are to be used to rebuild the Tallinn-Narva highway among others. According to the loan agreement, Estonia is borrowing 45 million euros for a term of 15 years with a 10-year grace period. The loan carries an interest of the six-month Euribor plus 0.38 percent, which at the moment would add up to roughly 5.1 percent. Interest is payable twice a year. The Parliament has, this year, already ratified a loan of 150 million kroons. Estonia's foreign loans totaled approximately 4.3 billion kroons ($233.56 million) as of Jan. 1.