Govt confirms major gas utility split for 2017

By April 3, 2017, the Latvijas Gaze natural gas utility will have to be split into two legally distinct entities - one for gas distribution and sale, and another for transmission and storage. 

The government green-lighted the amendments to the energy law on Tuesday.

After the companies are separated, Latvijas Gaze has to fully complete the separation of property rights of the operator of transmission and storage of gas by December 2017, so as to make the new company fully independent from Latvijas Gaze and so that its owners are unrelated to Latvijas Gaze or its shareholders.

The Minister of Economics Dana Reizniece-Ozola (Greens and Farmers Alliance) said that Latvijas Gaze objects against the date of the separation - the company wishes for it to happen only in 2019.

The company also objects against the amendments that cement the state's property rights to the Incukalns gas storage facility. 

The Economics Ministry does not expect the unbundling of Latvijas Gaze to have a significant effect on gas tariffs, because the company's administrative costs affecting the unbundling process make up only 1-2% of the tariff.

The Latvijas Gaze management has previously said that the new company that would be established in the unbundling process might start operations no sooner than in July 2019.

Latvijas Gaze is engaged in purchasing, transportation, storage and distribution of natural gas. The company is quoted on the Secondary List of the NASDAQ Riga stock exchange.

The company's key shareholders are Germany's E.ON Ruhrgas International, Russia’s Gazprom and Itera Latvija.

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