Economics Minister urges buying gas transmission utility

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Latvia should buy over 50% of shares in the natural gas transmission company that will be created after splitting the Latvijas Gaze natural gas utility, Economics Minister Arvils Aseradens (Unity) said during a parliamentary meeting Wednesday, reported LETA newswire.

During the meeting Aseradens said that work was under way to divide assets of Latvijas Gaze between the company for gas transmission and storage and the company which will be responsible for gas distribution and sale.

The Latvian state has no intention to acquire any shares in the gas distribution and sales company but the possibility of acquiring a stake in the gas transmission and storage company is being considered, the minister said.

"There are three options. First, the state does not buy any shares in the new company. Second, the state buys more than 50 percent of shares. Third, the state buys minimal number of shares to secure the right of first refusal. The Economics Ministry is working on a report, and we intend to bring in an international adviser to analyze these scenarios,” Aseradens said.

Preferably the state should buy more than 50 percent of shares in the gas transmission and storage company which is how it was done in other Baltic states but the adviser might offer a different solution, the minister said.

The government is yet to choose the adviser who will be expected to produce the recommendations by the end of this year.

The Latvian parliament in February this year passed amendments to the Energy Law in the final reading to support liberalization of the gas market and rules on breaking up Latvijas Gaze.

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.

The process of separating the natural gas transmission and storage operator from Latvijas Gaze should be completed by December 31, 2017. That means that the operator will be a company whose owners will not be affiliated with Latvijas Gaze or its shareholders in any way.

Russia's Gazprom owns 34 percent of Latvijas Gaze shares, Marguerite Fund has 28.97 percent, Uniper Ruhrgas International GmbH 18.26 percent, Itera Latvija 16 percent, and minority shareholders own 2.8 percent of Latvijas Gaze shares.

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