Government tight-lipped on gas purchase plan

The Latvian government on April 4 decided to make no comment on whether it is planning to buy a stake of the new gas transmission and storage company, Conexus Baltic Grid. 

At a cabinet meeting the government gave 'confidentiality status' to any discussions in the Cabinet of Ministers and its possible decisions regarding potential acquisition of shares in Conexus Baltic Grid.

Speaking to the press after the Cabinet meeting, Economics Minister Arvils Aseradens said that any matters concerning Conexus Baltic Grid had been declared confidential therefore "there will be absolutely no comments".

The matters concerning the possible purchase of shares in Conexus Baltic Grid have been declared confidential at the request of the Economics Ministry.

Inevitably, the fact such a request was made - and granted - strongly suggests that a deal is indeed being brokered, otherwise it would simply be a matter of denying it. 

The Economics Ministry is believed to be considering three possible scenarios regarding the shares in Conexus Baltic Grid, namely, the Latvian government not buying any shares in the new company, becoming a minority shareholder or acquiring a controlling stake.

With the opening of the Latvian gas market on April 3, the amendments to the Energy Law giving the Latvian state the right of first refusal in respect of purchase of the shares in Conexus Baltic Grid took effect.

The Latvian parliament in February 2016 passed amendments to the Energy Law to support liberalization of the gas market and the rules on unbundling Latvijas Gaze natural gas utility.

Under the amendments, Latvijas Gaze has to be split up in two companies - one for operating the gas transmission and storage system and the other for dealing with natural gas distribution and sale - by April 3, 2017, and the former has to be separated from Latvijas Gaze by December 31, 2017.

Conexus Baltic Grid takes over natural gas storage and transmission functions from Latvijas Gaze, and was established on December 22, 2016.

Its largest shareholders are Russian Gazprom (34.1 percent), Marguerite Fund (29.1 percent), Germany's Uniper Ruhrgas International GmbH (18.3 percent) and Itera Latvija (16 percent) in other words, exactly the same as Latvijas Gaze shareholders.

But the shareholders, with the exception of financial investor Marguerite Fund, have to dispose of their shares in Conexus Baltic Grid by the end of 2017 so that the same shareholders are not offering both supply and retail services.

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