Economics Minister chides steelworks for big demands

Take note – story published 8 years and 4 months ago

The troubled KVV Liepajas metalurgs steelworks want too much from the state, and its owners think about business within the Soviet rather than EU tradition, Economics Minister Dana Reizniece-Ozola told Latvian Radio Monday. 

Reizniece-Ozola said it seems the company has the impression that it can ask the state for different bargains, and the head of the government will submit to any changes with a quick signature. 

She said that the company had been given discounts for rail services and that its mandatory purchase component [MPC or a component of the electricity price supporting production of renewable energy] had been lowered. The company had also asked for the removal of guarantees it had given to the state.

"At the moment the state is in a good position as the guarantee has not been lost. The question is whether the business can pull itself together," she said.

Recently the steelworks asked the State Chancery to defer a payment of €2.7m for two years. The payment was due in 2015.

The company ran into financial troubles and had to cease production in spring 2013 due to a shortage of working capital.

Liepajas Metalurgs could not repay a state-guaranteed loan it had taken from an Italian bank, and the loan was repaid by the Latvian state. Liepajas Metalurgs was placed under legal protection but all negotiations about rescuing the company and bringing in a new investor failed and the company’s administrator filed for insolvency. 

On October 2, 2014 the steelworks were sold to Ukrainian KVV Group. At one point the company employed 960 people. The company cut down production on May, citing high cost of electricity, in particular the large amounts payable for the MPC. This left some 600 workers in the company, where only 400 work now. 

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