Latvian Gas Utility Opposes Govt's Restructuring Plan

Latvia's gas utility Latvijas Gaze, partly owned by Russia's Gazprom, is opposing restructuring plans approved by the Baltic state's government, the company said on Wednesday.

 

The government said on March 3 that it wanted to split Latvijas Gaze by the beginning of 2017 and to implement ownership unbundling from April 2017, meaning that Gazprom, as gas supplier, would have to sell its stake in the gas transportation and storage business.

 

The unbundling was proposed by the government in an effort to open its gas market for competition.

 

Latvijas Gaze, in which Gazprom holds a 34 percent stake and Germany's E.ON 47.2 percent, has a monopoly to transport and sell natural gas in Latvia and operates the only underground gas storage in the region.

 

The utility, however, told the government in a letter that the company cannot be split before April 2, 2017, when the existing privatisation agreement with its shareholders expires.

 

The company said the agreement signed in 1997 obliges the state to keep Latvijas Gaze as a single entity.

 

It also said that the proposed reorganisation could take much longer than envisaged by the government.

 

"Latvijas Gaze finds that an entity formed as a result of reorganisation would be able to start working no earlier than July 1, 2019," the company said.

 

The utility's spokesman Vinsents Makaris said that any attempts to split the company before April 2017 could be appealed in court.

 

"The company will do all it can to protect interests of its shareholders, and they can also go to the court themselves if they consider their economic interests to be harmed," he added.

 

Latvia's Economy Minister Dana Reizniece-Ozola has said that the government should consider buying the assets to regain control over strategic infrastructure.

 

Germany's E.ON is seeking to sell its stake, but the Latvian government has declined to buy, arguing that it would not provide a majority holding.