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    Latvia: Marguerite Fund is Only a Possible Buyer

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Summary

Latvia’s economics ministry has played down reports that Latvia may have partnered with the EU-backed Marguerite Fund investment to buy the country’s gas transmission and storage assets from Gazprom

by: Linas Jegelevicius

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Latvia: Marguerite Fund is Only a Possible Buyer

Latvia’s economics ministry has played down reports that Latvia may have partnered with the EU-backed Marguerite Fund investment to buy the country’s gas transmission and storage assets from Gazprom. The deadline for unbundling the monopoly Latvijas Gaze is a year off.

The ministry told NGE that there has been no decision on the state’s involvement in purchasing the gas transmission and storage assets, including the large Incukalns facility which also serves Estonia and Lithuania.

“Marguerite Fund is only one of the possibilities,” it said, emphasising that, at the moment, there are no discussions about “any” certain buyer.

“Before taking a certain decision, the ministry for the economy is evaluating possible scenarios and this year it will negotiate with all shareholders about Latvijas Gaze assets after the unbundling of the company,” the ministry said.

As required by the EU’s third Energy Package, Latvia must split up Latvijas Gaze into separate sales, transmission and supply units by April next year.

Latvia’s ruling coalition has passed amendments to the country’s energy law, paving way for liberalization of the country’s gas market. But Latvijas Gaze, the country’s sole natural gas supplier, insists it has an exclusive right to supply Gazprom's gas until 2017, by which point the unbundling must be finished.

Russia’s Gazprom holds a 34% stake in Latvijas Gaze. Another major shareholder was E.ON Ruhrgas, now Uniper. On January 28 it sold a 28.97% stake to the Luxembourg-based Marguerite Fund for an undisclosed sum, making Marguerite the second largest shareholder. The deal was intended to pressure the company to conform to EU regulations. Uniper will remain a shareholder of Latvijas Gaze with an 18.26 % stake. Russian gas trader Itera has 16% and other shareholders have 2.77%.

The Russian controlled company is trying to stave off liberalization, which comes as its 20-year monopoly in Latvia – granted during the privatization process – comes to an end. The Latvian government failed in a bid to buy into Latvijas Gaze in 2014.

 

Linas Jegelevicius

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