Skele, LPA council haggle over oil dock shares price

RIGA - There is disharmony in the ranks of the Latvian Privatization Agency over the minimum price of shares to be sold in oil terminal Ventspils Nafta. The board of the LPA and former Prime Minister, Andris Skele, who still is the LPA's trustee, have differing opinions on the 5 percent of VN shares which go on sale at the Riga Stock Exchange on April 28.

Two board members from the LPA have said that the VN minimum share price should not be dictated by the LPA but be set in accordance with the average price the shares were worth in March - $1.28.

The LPA council has set the price at $3.28.

"VN shares have to be sold for the minimum share price of $3.28 so the government's interests are looked after," said Jurgis Liepnieks, spokesman for the former prime minister and current Economics Minister Skele.

Liepnieks' comments were directed at LPA board members Imants Mantins and Didzis Azanda who said at an LPA board meeting April 7 that the price of VN shares should be dictated by the Riga Stock Exchange. Mantins and Azanda said the 5.2 million shares will not attract the attention of investors, because the minimum price is too high.

"There is no foundation for the government to fix a minimum price when the practice of selling shares on the stock exchange is to sell the actual worth of the shares," said Mantins. "We need a criteria to be followed concerning the privatization of government assets, and it needs to be subjective.

"We can't push onto potential buyers a price of shares that is fixed. It's my opinion that an open auction would show the real value of shares," he said.

The LPA is standing by its decree that VN shares are to be sold by the price that the LPA council agreed upon and to sell the oil company's shares for a lower price will incur losses to the government.

"To sell the VN shares for $1.28 does not stand by the LPA agreement to sell the shares," said Viktors Sadinovs, the executive director of the LPA. "To drop the price does not have the backing of the government and the terms reached by the LPA for selling the VN shares."

Azanda does not agree with the stance the LPA council has taken. He said the price of VN shares sold by the government need to reflect the actual worth on the stock exchange, otherwise the set price of VN shares by the LPA will fail at auction.

"Last year, we [the LPA] started the process of selling Latvia's Shipping Company with a set price and lost out with no contenders," said Azanda. "We received no prospective buyers and still the LSC has not been privatized."

Skele's response to the two LPA board members on April 8, was that Mantins and Azanda should be sacked and removed from the LPA board.

Following his resignation as prime minister April 12, Skele is still the LPA trustee and economics minister following his removal of Vladimirs Makarovs from the ministry. Until a successor is found to replace Makarovs and a new prime minister is appointed, Skele will hold down all three positions.

"There is no basis and reason to drop the price of VN shares and a good example is the successful sale of the Latvijas gaze shares that were sold at a set minimal price," said Liepnieks. "The government would lose $25,420 million in revenue from the lowering of VN shares to market value."

Liepnieks linked the push to lower the price of the shares to Makarovs' taking away the signature rights of LPA general director Janis Naglis.

"The Economics Ministry saw the sale of VN shares as very important, Makarovs thought the LPA had taken too long to establish a criterion to sell the shares," said Liepnieks.

The former economics minister could not be contacted, but his spokesman, Romans Melniks, said the sale of VN shares is the responsibility of the LPA and the LPA trustee Skele.

"On the previous thoughts of Makarovs I will not comment, and it is now up to the LPA to sell the shares through the RSE," said Melniks. "All I can say is that Makarovs said the sale of the VN shares needed to be done."

Under the privatization terms of VN, the minimal share value was set by the LPA council March 23. The council ordered the LPA board to arrange the sale of 5 percent of the company April 28. The terms set by the LPA council did not take into consideration the practice of selling shares at the average share value a month before the actual auction.

The RSE was waiting for official notification from the LPA on the value of VN shares, said Aivars Slokenbergs from the RSE.

"The stock exchange is just a technical infrastructure and the LPA has to decide officially the price set for the auction of VN shares," he said.