NRG advice to cost Eesti Energia 65 million kroons

Eesti Energia will have to pay 65 million kroons ($4 million) to the Schroders investment bank for counseling the failed NRG deal, but the company is refusing to pay the sum in full, the daily Postimees reported.

According to an agreement concluded in 1998, Schroders counseled the state of Estonia in the privatization of the Narva Power Plants (Narva Power Stations, AS Narva Elektrijaamad). Each month, Schroders received $30 000, and, had the deal been successfully completed, the bank would have received an additional $5 million.

Plans to privatize NRG fell through last year after 42 months of tense negotiations.

The agreement also entitled the bank to $65,000 for each month of negotiations should the deal fall through Schroders is now demanding $2.73 million from Eesti Energia in addition to the already received $1.26 million.

Heido Vistur, a counselor at the Economy Ministry, criticized the previous government for allowing the sell-off negotiations to drag on so long, thus running up the tab.

"The government ought to have interrupted the deal, or completed it very quickly," Vitsur said.

That center-right government stepped down amid squabbling among coalition partners in March.

But officials at Suprema, Schroders' Estonian partner, insisted the bank was not overpaid.

"It was not our fault that the process was so long," said Suprema's Henrik Igasta.

Eesti Energia reported a profit in 2001 of 340 million kroons, the first time in its history it ended the year in the black.

This year, the company to invest 3.8 billion kroons, 2 billion of which will be used to renovate the Narva power stations.