New leaf turned in massive Baltic Pulp project

The 900 million euro pulp mill saga began a new chapter this week, with project directors publishing two key impact reports on the eve of a crucial meeting with Latvian government officials.

The reports - a draft on the environmental effects and a full one on economic impact of the massive project - were submitted last week to both government officials and the public.

Metsaliito, the Finnish company that controls the pulp mill project, is scheduled to meet with the Latvian government on April 17 to continue negotiations on the project's implementation.

Una Ulme-Sila, press secretary to Deputy Prime Minister Ainars Slesers, who heads the government task force responsible for working out the conditions of state aid for the project, said that now that the environmental and the socioeconomic impact assessments had been released, there was good reason to believe that the pulp-mill project would gain momentum.

However, the government's task force has yet to make a concrete decision in its negotiations with potential investors, Slesers was quoted as saying by the Diena newspaper.

"I can say quite safely that the government will have a concrete opinion on the pulp-mill project on [April 17] morning," Una Ulme-Sila told The Baltic Times.

"The question can no longer be delayed," she said.

In order for the almost 1 billion euro project – by far the largest investment project in Latvia so far - to get off the ground, an implementation agreement defining tax, infrastructure development and other conditions has to be negotiated between Metsaliitto and the Latvian government.

Initially, the potential investor Metsaliitto requested, among other conditions, an income-tax break of 80 percent over a period of 20 years, Latvia's investment in infrastructure and guaranteed supply of paper wood from the state's forests, according to the Baltic News Service.

Eero Kytola, chairman of the board of Baltic Pulp, the company in charge of the project, and Metsaliitto shareholder, did not elaborate on any concrete demands.

Kytola said the implementation agreement was a "package" deal, including many issues that were already agreed upon, some that were "open," and some "not yet agreed upon."

Ulme-Sila said a special group had met with the investors two weeks ago to define their exact demands.

Even though the government decided to sell its stake in Baltic Pulp this past January, it still owns one-third of the project's stock.

"The owners have agreed that the Latvian state and Metsaliitto exercise joint authority in matters relating to Baltic Pulp," said Jukka Laitinen, managing director of Baltic Pulp.

But the share transfer will eventually take place, with exact conditions to be hammered by Metsaliitto and the government.

A third party initially involved in the pulp-mill project, Sweden's Sodra Group, decided to sell its stake in the project at the end of last year.

The Metsaliitto Group is one of Europe's largest forestry conglomerates, with its products being sold worldwide.

If it does get launched, the pulp mill will be built in Ozolsala, in the Jekabpils region, in the second half of next year.

According to the draft environmental assessment study, no significant damage will be caused to the mill's surroundings.

Emissions and discharges from the mill will be among the lowest in the pulp industry, according to the report.

"In modern technology, the quantity of waste-waters is so small and well-treated that it will not be of any harm. This report will show that there is no reason for any kind of fear," said Laitinen.

Baltic Pulp held this week two public hearings on the draft report, in Jekabpils and Riga.

The predicted socioeconomic impact of the pulp-mill project on the regional development and welfare, as well as on the Latvian economy in general, is overall positive, according to the socioeconomic impact study.

In the construction phase of the pulp mill, Baltic Pulp plans to employ 850 - 2,000 people, depending on the phase of work.

"The workers employed will be partly local and partly from the companies which will deliver the main machinery," said Laitinen.

The main machinery for the mill will be constructed in Scandinavian countries, as well as in Austria, Germany, the U.K., and France.

If all goes according to plan, Baltic Pulp expects to receive an environmental permit within the first quarter of 2004.