The sum of the transaction and other terms are confidential.
The decision on acquisition of the shares was made during the government’s meeting on December 19.
Upon completion of the deal, the Latvian state will hold a 34.36% stake in Conexus Baltic Grid.
After thorough analysis of advice and reports from responsible institutions and independent consultants, the government concluded that acquisition of shares in Conexus is important for energy independence and security of supply of Latvia.
At the same time by acquisition of the shares in the Incukalns underground natural gas storage system operator, the state aims to continue moving towards establishing regional Baltic – Finnish natural gas market by 2020, Augstsprieguma Tikls said in a press statement.
This aim will be fully achievable by further development of the relevant regional infrastructure (Estonian – Finnish interconnection Balticconnector and Polish-Lithuanian interconnection GIPL), achieving high market efficiency, equal competition and level out prices of natural gas in the local market with Central European market. At the same time, acquisition of shares in Conexus is an economically feasible transaction for the Latvian state, according to evaluation, which was carried out according to internationally recognized methods, the company said.
The government’s decision to entrust the acquisition of shares in Conexus to the Augstsprieguma Tikls was taken because the company as an electricity transmission system operator has experience in operations and development of the energy transmission infrastructure.
Acquisition of shares in Conexus will also provide Augstsprieguma Tikls with additional advantages in guaranteeing electricity supply security because natural gas is the fuel for large Riga thermal power plants – nationally and regionally important source of heat and electricity, which guarantees stable electricity supplies in the periods with unfavourable hydrological conditions in Latvian hydro power plants on river Daugava, cold weather, and high electricity and heat energy demand.
As reported, on December 15 Augstsprieguma Tikls and the Germany-based energy company Uniper Ruhrgas International GmbH (Uniper) reached an agreement on the purchase of Uniper’s 18.31% of shares in Conexus Baltic Grid.
Conexus Baltic Grid was founded late last year to take over natural gas storage and transmission functions from the giant gas utility Latvijas Gaze. The company’s share capital is 39 million euros.
Latvian commercial TV3 channel reported earlier that the value of Conexus Baltic Grid shares might be 200 million euros.
The largest shareholders of Conexus Baltic Grid are Russian Gazprom (34.1%), Marguerite Fund (29.1%), state-owned Augstsprieguma tīkls (18.3%) and Itera Latvija (16%) or 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 new shareholders would not be related to Latvijas Gaze.
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 to purchase of shares in Conexus Baltic Grid took effect.