Gas utility halts supplies to steelworks

The joint-stock gas supply company Latvijas Gaze has halted gas supplies to the troubled joint-stock metallurgical company KVV Liepajas Metalurgs Friday afternoon, Latvijas Gaze told LETA. 

The decision was made as the metallurgical company has not been able to pay-off its gas bills.

Since the payments have not been made as of yesterday, the total debt KVV Liepajas Metalurgs owes the company has reached a level that further gas shipments have been halted. The company points out that an agreement on a repayment schedule has also not been made.

The utility points out that gas supplies to the metallurgical company will resume when the debt is paid in full.

As reported, Latvijas Gaze warned earlier this month that gas supplies to KVV Liepajas Metalurgs might be suspended because the metallurgical company has missed several payment deadlines already.

After KVV Liepajas Metalurgs metallurgical company had missed a payment of €2.7 million that was due to the Latvian state in late 2015, the Treasury has started drawing on its collateral within the company.

The steel plant tried to negotiate an extension of the payment deadline but failed to meet the conditions set by the government for debt rescheduling. Therefore the Treasury started drawing on the collateral provided by KVV Liepajas Metalurgs. In particular, the Treasury invoked a guarantee issued by Russia's Alfa Bank and valid until late January.

So far the government has recovered one-fifth of the amount it had paid previously to Italian bank UniCredit when the steel plant could not repay to UniCredit a state-guaranteed loan.

Despite several false dawns, production at the plant has failed to get into full swing with questions asked about the ability of its owners to effectively manage the company which is the largest employer in Latvia's third-largest city, Liepaja.

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