Latvenergo profits might be used to cover distribution rate increase

On Thursday, August 31, the state-owned Latvenergo announced a new revenue and profit record for the half-year. The discussion on how to distribute the profit includes offsetting the increase in distribution rates on certain occasions. The idea would still have to be approved by both the government and the Saeima, Latvian Television reported on August 31.

Latvenergo finished last year with good financial figures. However, this year's financial indicators show that, at least in the first half year, Latvenergo is even more successful.

In the six months of this year, the company's turnover increased by 56%, compared to the same period last year, and exceeded EUR 1.1 billion. Meanwhile, profit increased by 57%, reaching EUR 222,5 million.

The main reasons are the long spring flooding in the Daugava allowing for hydropower use, and good company activity abroad, said the company.

“Especially in the Lithuanian market, where the opening of the market took place, we managed to be one of the best alternatives to the market leader Ignitis. We are currently a stable second player in Lithuania as well. In fact, we have increased the total number of customers by 50% abroad,” said Mārtiņš Čakste, Chairman of Latvenergo Board.

Latvenergo Group gained a third of its income abroad. The Ministry of Economics (EM) is satisfied with the results of its activities as a holder of Latvenergo shares.

“There are still myths and there is a sense that it is a monopoly, but Latvenergo works in a free market. It is an opportunity for Latvia to develop its economy, it is an opportunity for Latvia to build and increase exports, and actually bring revenues directly to Latvia. It is an opportunity to create very well-paid jobs, and it is an opportunity for growth,” said the EM Secretary of State Edmunds Valantis.

According to Latvenergo, the company is a leader throughout Europe in terms of the dividends paid out. For example, EUR 134 million, or 64% of the total profit, was paid in dividends for the past year. It has traditionally financed different needs in energy and other areas.

This year, assistance could be introduced in the event of extreme increases in energy prices, if any, during this heating season, as well as assistance with newly approved distribution bills.

“We are in a situation where it takes time for households to choose the most appropriate and economically justified type of distribution. We are working on the system here, and the source of funding for this system would also be Latvenergo's share of dividends, which would allow smaller distribution bills to be received in a limited period,” said Climate and Energy Minister Raimonds Čudars (New Unity).

Support could be given to those who currently have the possibility to review their connection capacity.

The introduction of the mechanism will still require support from both the government and the Saeima.

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