President criticizes power plant privatization

The Baltic Times, TALLINN
By Kairi Kurm
Aug 23, 2001

Estonian President Lennart Meri unleashed another of his critical outbursts regarding the privatization of two large power plants in the eastern city of Narva by the U.S. company NRG Energy, on Aug. 17.

The U.S. Embassy in Tallinn responded to the statement sharply the same evening declaring that the government’s task was to fulfill the obligations taken.

In his statement to the leaders of the parliamentary factions in the president’s office in Kadriorg in the capital, Meri blamed the government for making huge mistakes in the privatization of the power plants and called on the factions to discuss the matter further. He also suggested the politicians involved in the privatization process resign their posts.

“It is the constitutional duty of the head of state to maintain the constitution of the Republic of Estonia and the national defense of the Republic of Estonia, including the defense of strategically important sectors of the economy,” Meri said.

The president said that the privatization is in conflict with the Energy Act enforced by the Parliament. The sale of a company with such a strategic value also requires the consent of the Parliament, he noted.

On Dec. 16, 1998, the Parliament demanded that the privatization of the power plants be presented to legislators for approval. The government has not done this.

The U.S. power company NRG Energy and the state power company Eesti Energia signed an agreement on the principal conditions of establishing a joint venture on the basis of the two power plants on Aug. 25, 2000. NRG Energy is negotiating with banks to find the best financing deal, which is likely to be signed in September.

The terms give NRG Energy a 49 percent stake in the state-owned Narva Power Plants, while 51 percent of the shares would remain in the hands of Eesti Energia, which would be required to buy electricity from the plants for the next 15 years.

In his statement the president pointed to a number of shortages that had to be discussed. He suggested to analyze whether the agreement was in accordance with the Rome, Maastricht and European treaties on open markets and competition, and with the government’s decision on the evaluation of the shares of Eesti Polevkivi, an oil shale mining company 51 percent owned by the Narva plants.

After the privatization, this stake would go to NRG Energy, which still has to pay an extra 500 million kroons ($3 million) for it.

Meri suggested to find an answer as to whether the privatization agreement would separate the operating and transmission frequency of the Estonian power system from the control center in Moscow.

The president warned that a solution must be found for the utilization of the ashes from fluidized bed boilers, which – unlike the current flying ashes – may severely pollute the Narva River and the Gulf of Finland.

The government discussed President Meri’s demand to reconsider the privatization with representatives from the utility company Eesti Energia and the Academy of Sciences on Aug. 21. On Aug. 22 the government stated that the sale of 49 percent of Narva power stations is in line with the desired development course of Estonian power engineering.

An extraordinary parliamentary session to discuss the issue has been called for Aug. 23. The last session on this matter, called on the opposition’s demands in July 2001, failed because most of the ruling coalition’s members were not in attendance.

Andres Herkel, vice chairman of the Pro Patria Union, which leads the ruling coalition, said that his party was planning to participate in the extra session on Aug. 23, because the topic needed to be discussed openly. “We are of the opinion that the power plants have to be privatized,” said Herkel. “All of the questions raised have to be solved. We suggest the government set a date for further discussions.”

Heikki Talving, a spokesman for the Moderates, another coalition party, said that he was expecting a speech from Prime Minister Mart Laar next week on topics regarding the privatization, its risks, and what would happen if the power plants remained state-owned.

Edgar Savisaar, head of the opposition Center Party, said that his party and the People’s Union party, the second largest opposition group, had been against the privatization plan from the start. He invited academics who have protested against the power plants’ sell-off in the past to participate in the coming session.

The opposition wants to know why it is necessary to sell the power plants and how profitable it will be for the state. It is also demanding that the contracts with NRG Energy and the privatization adviser be made public.

According to the president, it is illegal to privatize in secret the branch of industry that has the greatest strategic value in Estonia. “I consider it self-evident that all the members of the Riigikogu (Parliament) will have the possibility, in a closed session if necessary, to be introduced to all the details of the agreements and, if necessary, to invite oil shale power experts to the session,” said Meri.

U.S. Ambassador Melissa Wells told The Baltic Times that the U.S. government was watching the privatization process carefully. “Washington called the U.S. Embassy in Estonia on Friday (Aug. 17) and declared that the United States was distressed about the statement,” said Wells. “It is our custom to support U.S. interests abroad. We are talking about a great investment here.”

How would the embassy react if the Parliament halted the privatization process? “I don’t know. We have a large delegation of U.S. congressmen coming to Estonia this weekend. We’ll see how they take it,” she said.

Source: http://www.baltictimes.com/news/articles/5357/

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