Power restructuring continues

Eesti Energia, Estonia's power engineering monopoly, recently conducted a share issuance as part of an overall restructurization program aimed at maximizing effectiveness in the power industry.

The government will acquire the entire stock increase and will pay by giving Eesti Energia share of Estonian Oil-Shale, a mining division in the integrated Eesti Energia holding that is currently owned by the state (49 percent) and Narva Power Plants (51 percent).

As a result of the restructurization, all four divisions of Eesti Energia - Estonian Oil-Shale, Narva Power Plants, Distribution Networks and Basic Networks - will acquire an equal status in the vertically integrated structure.

"We will sell Eesti Energia back the share of Estonian Oil-Shale and thus decrease the debt to Eesti Energia we have because of the power stations renovation," said Ants Pauls, general director of Narva Power Plants.

"As to our everyday work, the share capital increase of our holding company will not really affect us. We have good relations with both Eesti Energia and Estonian Oil-Shale," he added.

The price of oil-shale will likely not rise after Narva Power Plants gives up its stake in Estonian Oil-Shale, added Pauls.

"Estonian Oil-Shale will remain 100 percent owned by Eesti Energia, and thus the oil-shale price is unlikely to grow," he said.

The oil-shale price makes about 50 percent of the current energy price.

Any sale of individual Eesti Energia divisions is also impossible, according to Pauls, since a long-term, 550-million-kroon loan taken in 2000 from a syndicate of international banks requires the monopoly to keep its integrated ownership structure until 2015.

Eesti Energia's share capital increase from 6,696,100,000 kroons to 7,274,100,000 kroons will be affected by emission of 5,780,000 shares with a 100-kroon denomination.