OFF THE WIRE

SHIPPING LAWSUIT: The Latvian Shipping Company may bring a lawsuit against Latvia for damages incurred because of failed plans to replace its ageing tanker fleet. LASCO President Andris Klavins said the shipping company incurred losses of $60 million two years ago when political intrigues prevented the company from proceeding with plans to build new tankers. He hopes the company won't have to suffer any more damages in the future and its tanker fleet will be replaced. "There's no doubt that a fleet in high demand is likely to be considered more attractive by potential investors than a fleet standing idle. LASCO's fleet renewal should continue next year. We need new tankers because ships purchased recently replace only a small share of the fleet's total holding capacity," said Klavins. This November LASCO completed a deal with Greece's Tsakos company to buy three tankers for more than $120 million. Another attempt to sell off LASCO failed last spring as none of the potential bidders for the shipping company's shares paid the $5 million security deposit required under the privatization terms.

FINDING FOOTING: Latvia's Banka Paritate could reopen next week, once the court ruling terminating insolvency proceedings against the bank is received. "As soon as it's done, the bank will be ready to reopen," a bank administrator said. Banka Paritate could be back in business under the same name sometime next week, but the exact date is yet to be announced. By way of rehabilitating the bank, Ukrainian Privat Bank will hold 100 percent of Banka Paritate shares as a result of the deal approved by a Latvian financial supervisory body on Nov. 23. This summer the bank was declared insolvent as its liabilities exceeded assets.

MOBILE MUSCLE: Three Baltic mobile network operators - Latvia's LMT, Estonia's EMT and Lithuania's Omnitel - aligned to form the Baltic Sea Alliance to compete with other providers in the region. Johnny Svedberg, vice president of the alternate Latvian mobile operator Tele2, said BSA could not take away the company's advantage in the Baltic states because Tele2 was operating as an integrated telecommunication company in 21 countries, including the Baltics, Russia, Sweden, Norway, Denmark and elsewhere. The first joint service of BSA will be to provide BSA members' customers a more favorable roaming service in BSA partners' networks, Estonia's EMT said. There are no plans for changing the firms' ownership structure.

PHONE FEES: Markus Nisula, board chairman of Uninet, said Eesti Telefon might lose up to 50,000 clients due to a rise in its monthly call services fee in 2002. The Estonian phone company has 400,000 private customers at present. But if it loses 50,000 clients, it will see its income from monthly fees decline by more than 4.5 million kroons ($253,000). Nisula said there was an ongoing trend toward a reduction in the number of ordinary telephones in all the countries where the distribution of mobile phones was high, as in Estonia. But Veikko Maripuu, an analyst with the investment bank Suprema, said while he expected the telecom to lose some customers in connection with the increased monthly fee, the number of those dropping out would be less than 5 percent of the total number. The Increased monthly fees should bring Eesti Telefon about 10 million kroons of additional monthly income.

PORT PACT: Rein Kilk, owner of Estonia's Parnu and Tartu seaports, is meeting with Russian government officials to discuss the use of ports in Russia's Pskov region for passenger and freight transport from Estonia. Kilk said he was interested in establishing an operator firm at the port of either Pskov or Starozhinets to take care of passenger and cargo transport, but acquisition of a holding in those ports was not ruled out. "It now depends on proposals from the Russian side," he said. Above all, Kilk said he was interested in the transport of timber from the Pskov region to Tartu Port because it was cheaper than rail transport. Kilk said the timber would be processed in Estonian sawmills. A sawmill partly owned by Kilk was launched in Suure-Jaani in November. The administration of the Pskov region of Russia has repeatedly declared its interest in the restoration of international boat traffic on lakes Peipsi and Pskov.

GOING WHOLESALE: The German wholesale group METRO intends to open a wholesale trade center in the Lithuanian capital of Vilnius, company representatives said during a meeting with Arturas Zuokas, the city's mayor. Zuokas said a wholesale trade center would promote competition in the country and would prevent retail trade centers based in Vilnius from imposing conditions for suppliers. The wholesale center would also open opportunities for local suppliers to expand production, as METRO trade centers usually purchase local agricultural and textile products. The mayor assured METRO representatives that they chose the right location for their investment, as it could draw not only Lithuanian but also Belarusian customers. Ramune Zabuliene, an aide to Zuokas, said neither the amount of investment nor a possible opening date for the center was discussed.

TAX TANGLE: The Lithuanian Parliament's budget and finance committee rejected lower personal income taxes for 2002 when it failed to approve for parliamentary debate liberal MP Jonas Lionginas' proposed legislation. The proposal would have lowered personal income taxes from 33 percent to 31 percent as of January 1, 2002. Committee deputy chairman Gintautas Sivickas said the committee decided to take a break in hearing the proposed amendments to the law on personal income tax and to consider it together with a draft law the government is drawing up on personal income and income tax declarations. The budget and finance committee's official report on former Finance Minister Lionginas' proposed legislation says there are no plans to decrease personal income taxes during the planning of the 2002 budget. Government economists calculate that a reduction in personal income tax would mean municipalities lose around $37 million annually, while the public health care system would lose around $16 million.