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Augstsprieguma Tikls acquires shares in Conexus Baltic Grid from Itera Latvija
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    Augstsprieguma Tikls acquires shares in Conexus Baltic Grid from Itera Latvija

    RIGA, Dec 27 (LETA) – Latvian power transmission operator Augstsprieguma Tikls has acquired 16.05 percent of shares in Conexus Baltic Grid, the operator of natural gas transmission and storage infrastructure, from Itera Latvija, the company’s representatives reported.

    The sum of the transaction and other terms are confidential.

    The decision on acquisition of the shares was made during the government’s meeting on December 19.

    Upon completion of the deal, the Latvian state will hold a 34.36 percent stake in Conexus Baltic Grid.

    After thorough analysis of advice and reports from responsible institutions and independent consultants, the government concluded that acquisition of shares in Conexus is important for energy independence and security of supply of Latvia. At the same time by acquisition of the shares in the Incukalns underground natural gas storage system operator, the state aims to continue moving towards establishing regional Baltic – Finnish natural gas market by 2020, Augstsprieguma Tikls said in a press statement.

    This aim will be fully achievable by further development of the relevant regional infrastructure (Estonian – Finnish interconnection Balticconnector and Polish-Lithuanian interconnection GIPL), achieving high market efficiency, equal competition and level out prices of natural gas in the local market with Central European market. At the same time, acquisition of shares in Conexus is an economically feasible transaction for the Latvian state, according to evaluation, which was carried out according to internationally recognized methods, the company said.

    The government’s decision to entrust the acquisition of shares in Conexus to the Augstsprieguma Tikls was taken because the company as an electricity transmission system operator has specific and valuable experience in operations and development of the energy transmission infrastructure. Acquisition of shares in Conexus will also provide Augstsprieguma Tikls with additional advantages in guaranteeing electricity supply security because natural gas is the fuel for large Riga thermal power plants – nationally and regionally important source of heat and electricity, which guarantees stable electricity supplies in the periods with unfavourable hydrological conditions in Latvian hydro power plants on river Daugava, cold weather, and high electricity and heat energy demand.

    As reported, on December 15 Augstsprieguma Tikls and the Germany-based energy company Uniper Ruhrgas International GmbH (Uniper) reached an agreement on the purchase of Uniper’s 18.31 percent of shares in Conexus Baltic Grid.

    As reported earlier, in 2016 the Latvian parliament adopted amendments to the Law on Energy, envisaging the opening of the natural gas market for competition as of April 3, 2017 and reorganization of the vertically integrated natural gas company Latvijas Gaze. The law obliged Latvijas Gaze to establish two legally independent companies, one of them undertaking all activities related to natural gas transmission and storage and the second- distribution and trading activities. Thus in the process of reorganization from early 2017 all assets related with the transmission and storage of the natural gas (transmission networks and the underground gas storage) from Latvijas Gaze were transferred to Conexus Baltic Grid.

    The Energy Law of Latvia also envisages that shareholders of the natural gas transmission system and storage operator, which are involved in the natural gas production or trading activities, are obliged to sell their shares in Conexus until December 31, 2017. The aim of this provision is to secure complete independence of the transmission system and storage operator, neutrality towards all market participants and to avoid any risk that shareholders of Conexus Baltic Grid may face conflict on interest.

    The Energy Law of Latvia also grants the state the right of first refusal for the acquisition of shares of transmission system operator, the natural gas transmission and storage system or any parts of the system. Under considerations of state interests and forthcoming change of shareholders in Conexus, in 2016 the Latvian government decided to evaluate possible future scenarios. On basis of the preliminary study, the government supported negotiations with shareholders of the natural gas transmission system operator about potential acquisition of shares in Conexus, and o a consultancy agreement was concluded with a consortium led by one of the leading international advisors Rothschild. The consortium also includes Porta Finance, Deloitte and TGS Baltic.

    Conexus Baltic Grid, which will take over natural gas storage and transmission functions from Latvijas Gaze, was established on December 22, 2016. Its largest shareholders are Russian Gazprom (34.1 percent), Marguerite Fund (29.1 percent), Germany's Uniper Ruhrgas International GmbH (18.3 percent) and Itera Latvija (16 percent) or the same as Latvijas Gaze shareholders. But the shareholders, with the exception of financial investor Marguerite Fund, have to dispose of their shares in Conexus Baltic Grid by the end of 2017 so that the new shareholders would not be related to Latvijas Gaze.

    • Published: 27.12.2017 15:31
    • LETA
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