Energy, Estonia, Gas, Legislation

The Ministry of Economic Affairs and Communications has found, on the basis of the official worth of assets, that the transmission pipes of Eesti Gaas that are used to transport natural gas from county to county cost 600-700 million kroons. Sources advising Postimees noted that it is not likely that the pipe network could be purchased at such a low price.

The Government wants to buy back the gas transmission network via the electricity transmission grid enterprise Elering that was founded last year.

The legislative basis for the re-nationalisation would be created in the amendment proposals for the draft law on controlling monopolies that had been adopted by Riigikogu, but sent back to the Parliament by the President.

Raul Kotov, a member of the management board of Eesti Gaas, estimated that the entire company’s gas pipe network costs approximately four or five billion kroons. The State is not, however, planning to buy the pipes that lead to each individual household – these would be kept in the ownership of private enterprises.

“No one would sell these pipes at the price of 600 million kroons,” asserted Kotov.

The Government has been considering the idea of buying the transmission grid from Eesti Gaas for quite a while. Those close to the debates have not wanted to discuss the matter in public as the issue is politically sensitive – beside Finland’s Fortum and Germany’s Ruhrgas, Russia’s Gazprom is also a major shareholder of Eesti Gaas.

Last week at the Government press conference, Prime Minister Andrus Ansip disclosed the intent to re-nationalise Eesti Gaas’ transmission grid. He also stated that the matter is of some urgency. “The sooner the better,” he said, when asked how quickly the Government is planning to implement the idea.

The Prime Minister’s impatience, however, put the relevant officials in an uncomfortable situation as they were only planning to start negotiations on the matter with Eesti Gaas.

Kotov stated that he does not understand the Government’s wish to bury billions of kroons into the gas pipe network. He speculated that the Government may be prompted by businessmen who want to establish LNG terminals in Estonia as they hope to get better access to the nationalised transmission network.

Currently two developments in Estonia concern LNG terminals – one is planned to be established in Paldiski and one in Muuga. At the same time, experts have stated that due to low consumption volumes, there is only room for one LNG terminal in the Baltic region.

CEO of Elering Taavi Veskimägi remarked that in a number of European countries the electricity and gas transmission networks are administered by the same enterprise. He finds that it would be best for Estonia to organise matters in such a way.

When speaking about the LNG terminal, Veskimägi admitted that in the race to establish one, Estonia may be left behind by Lithuania. One of the reasons for it are Lithuania’s better chances due to the plan to establish an independent natural gas transmission system administrator. “We should be more efficient in our activities. From the point of view of energy security, there is not much difference whether the terminal is situated in Lithuania or in Estonia, but it would be useful for the Estonian economy to have the terminal here,” said the CEO of Elering.