NRG files lawsuit over sell-off

  • 2002-08-29
  • Aleksei Gunter

The troubled U.S. firm NRG Energy is suing Estonia's state-owned energy utility Eesti Energia for 100 million pounds (156 million euros), claiming damages from its failed attempt to acquire a share in the Estonian firm.

NRG filed the suit Aug. 21 in a British court. The damages the company is seeking are based on the value of the 49 percent stake it sought in Eesti Energia - a deal that was canceled in January.

"Eesti Energia considers this suit groundless," said Eesti Energia spokesman Erki Peegel.

NRG wanted to buy Eesti Energia's two oil-shale burning power plants in the eastern Estonian city of Narva. The Estonian government canceled the deal January 8 after NRG failed to obtain funding.

Under the deal, NRG would have paid $70 million (71.6 million euros) for the plants.

NRG is now suing for the value of the plants plus revenue it would have made had the privatization deal gone through.

International ratings agency Standard and Poors views the lawsuit with skepticism.

"There is significant uncertainty over the validity of the claim," Ralf Etzelmuller from the agency's Frankfurt office told The Baltic Times.

The Minnesota-based NRG Energy is facing bankruptcy as creditors have demanded $1.3 billion in cash as collateral for its credit line, AFP reported.

The NRG deal proved to be a political bombshell in Estonia and drew criticism to former Estonian Prime Minister Mart Laar, who stepped down.

A new government led by Prime Minister Siim Kallas refused to reopen negotiations in March following an NRG request.

The lawsuit has dredged up more negative attitudes toward NRG, particularly after the U.S. energy company Williams agreed to sell its share and management in Lithuanian refinery Mazeikiu Nafta last week.

Most defended the government's withdrawal from the deal and see the lawsuit as a desperate attempt of a failing American company to squeeze money out of the Estonian government.

"Lithuania's experience, with a 'strategic' investor from the United States selling the Mazeikiu plant to a Russian company, proves how vulnerable the myth is of trustworthy American businesses," said Mart Helme, chairman of the recently formed National Conservative Party. "We can assume with great probability that sooner or later the same would happen to Narva power stations if NRG would had privatized them."