Estonian scientist opens door to male contraceptive

The Baltic Times, TALLINN
By Kairi Kurm
Oct 25, 2001

Estonian microbiologist Mart Saarma, who heads the Institute of Biotechnology at the University of Helsinki, has discovered the part of men’s brains that regulates sperm differentiation. This discovery could eventually lead the way to the manufacture of male contraceptives – and a drug for curing infertile men.

It will take at least seven to 12 years before the innovation can evolve into a drug, said Saarma.

“We have started cooperation with pharmaceutical companies, but it is not yet clear when the further development of this innovation can produce a drug,” said Saarma. “I’m quite sure it won’t be a short period or an easy path.”

The finding itself was made a while ago and was published in the magazine Science in February 2000. It happened accidentally while searching a growth factor called GDNF (glial-derived neurotrophic factor).

“We made the discovery in close collaboration with professor Hannu Sariola’s group in Finland,” said Saarma. “We were both interested in GDNF.”

GDNF is known as a very potent chemical that stimulates the survival of dopamine neurons and motoneurons. It is therefore considered to be a potential drug for neurodegenerative diseases like Parkinson’s Disease and ALS (amyotrophic lateral sclerosis).

Sariola’s group has since discovered that GDNF is important for kidney development. Since animals die at birth if the GDNF gene is removed, it is very difficult to analyze its role in the brain.

“So we decided we should try to make transgenic animals that overexpress GDNF in their brains. Completely unexpectedly, these animals had a lot of GDNF in their testes and showed problems with spermatogenesis. That was the starting point, and in fact it took several years before we even reached that point,” he said.

After finding that GDNF affects spermatogenesis, Saarma and his team had to collaborate with several other groups before they obtained solid confirmation that GDNF really played a crucial role in spermatogenesis.

Several discoveries have been made that could result in a male contraceptive. There are a number of pharmaceuticals manufacturers around the world competing to produce the first magic pills, which are bound to be extremely lucrative.

One of the most likely drugs to hit the market in the near future is the male sexual hormone testosterone in combination with gestogene.

“Doctor Saarma’s foundation offers a new unique opportunity for men to choose the right time to have their babies. It will also hopefully improve the chances of curing infertile men. Men will be given the chance to decide on the time of pregnancy,” announced Olev Poolamets, an Estonian urologist.

Saarma, 52, studied biochemistry at the University of Tartu and received his doctorate at the Institute of Molecular Biology of the Russian Academy of Sciences. He worked for 16 years at the University of Tartu and 13 years at the Estonian Academy of Sciences before he applied for the post of director in the new Institute of Biotechnology in Helsinki in 1989.

He said his Finnish colleagues had recommended he apply for the job, and that he was very surprised to be selected.

“I started in 1990. My initial idea was to stay for two years. But I have found so many new challenges that I am still working here,” he said.


Bonnier to sell its stake in Estonian media empire

The Baltic Times, TALLINN
By Kairi Kurm
Oct 25, 2001

Estonian media baron Hans Luik may become sole owner of the biggest Estonian media organization, the Ekspress Grupp, if he finds the necessary funds to buy his partner’s stake.

Bonnier Group, a Swedish media concern, appears to have forced the issue after saying it will sell its 50 percent stake in Ekspress Grupp on condition that Bonnier can buy Luik’s half for the same price if he fails to purchase its stake within one month.

“We are not interested in getting rid of our shares in Ekspress Grupp,” said Lars-Gosta Juhlin, Bonnier’s representative on Ekspress Grupp’s supervisory council.

“Our priority is to be a majority owner. It always simplifies things if there is one decision maker. Two parties usually have different standpoints.”

Luik said he would have loved to continue cooperation on an equal basis with the Scandinavian publisher.

The price of the deal has not been officially disclosed. According to the business newspaper Aripaev, one of Bonnier’s other investments in Estonia, it is around 70 million kroons ($4.04 million) to 80 million kroons – less than the 150 million kroons to 200 million kroons Bonnier paid Luik for its shares in 1998, according to Aripaev.

But Juhlin refuted such claims. “Aripaev’s estimate is completely wrong and not even close to reality,” Juhlin said. Bonnier has carefully assessed the value of Ekspress Grupp, taking into account its profit and debts, he said.

Luik said that the deal was favorable and that Estonian banks had shown great interest in supporting the biggest Estonian media concern.

“I do not need partners for the time being. The situation might change when Estonia joins the European Union,” said Luik.

Although Bonnier has discussed ownership with Luik several times since 1998 he has not been interested in selling his stake.

“We haven’t made concrete offers. We’ve been discussing a possible change of ownership,” said Juhlin.

Luik said Bonnier had made its offer because it is paying more attention to the local Scandinavian market.

Some newspapers have speculated that Bonnier is in financial difficulties and is thus looking to sell its investments in countries like Lithuania, Poland and Scotland. The group made a $15.2 million loss in the first nine months of this year, while Ekspress Grupp’s half-year results showed a $483,000 profit.

“This year was low for all Western media companies. That is not the reason why we’re selling. Maybe we’re buying,” said Juhlin.

The Ekspress Grupp has 50 percent stakes in an array of Estonian titles and companies, including the tabloid Ohtuleht, the daily Eesti Paevaleht, the Ajakirjade Kirjastus publishing house, Lehepunkt, Expresspost and Eesti Meedia Foto. The company is also sole owner of the biggest weekly Eesti Ekspress, and owns 89 percent of the biggest Estonian printing plant Printall.

According to Luik Eesti Ekspress, Ohtuleht, Ajakirjade Kirjastus, Lehepunkt and Printall are working profitably, while the company’s Internet portal Mega, which has merged with Eesti Paevaleht’s online version recently, is operating at a loss. Overall, he said he would make a profit this year.

Mart Kadastik, chairman of the competing Eesti Meedia, commented that the possible changes in ownership were just speculation: “Luik wishes to buy the shares. We have to wait and see what happens in four weeks.”

There is nothing extraordinary about one person owning such a large Estonian company. The daily Postimees, which is controlled by Eesti Meedia, previously belonged to Heldur Tonisson before Schibsted acquired 92.5 percent of the company in 1998 and Hans Luik was sole owner of Ekspress Grupp before Bonnier joined him.

Kadastik still believes Bonnier may hang on to Ekspress Grupp. “Big companies mean businesses can be run better. A sole private owner might bring instability.”

According to Kadastik the merger of the tabloids of Ekspress Group and Eesti Media that took place a year ago was successful. The tremendously huge 35 million kroon total loss before the merger turned into a 10 million kroon profit this year.

Ekspress Grupp’s partner in Eesti Paevaleht is Vivarone, which is owned by Jaan Manitski. Luik believes that if he gets Bonnier’s stake in the paper he will be able to save it. Paevaleht, the second largest Estonian daily with a circulation of 44,500 copies, is the only Estonian newspaper in financial difficulties, according to Tarmu Tammerk, head of the Estonian Newspapers Association.

Luik said he was not planning any big changes in the Ekspress Grupp, but would approach different tasks step by step.

“When the shares in the company are divided exactly in half, then it inevitably creates a situation where people are praising rather than demanding things from the management.”

Besides the media company, Luik holds a stake in the Estonian information directory Ekspress Hotline and in the debt collecting company Julianus Inkasso. He is also active in real estate and advertising. He has a joint company with former classmates which processes soft-drink bottles into polyethylene terephthalate powder for export to China.

Estonian coastline to become more expensive

The Baltic Times, TALLINN
By Kairi Kurm
Oct 25, 2001

Estonian officials are planning to increase by a third and in some cases much more, the value of land as registered in the state’s cadastre.

Critics say the resultant tax increases could make owning land an expensive hobby for the rich.

The Estonian National Land Board is re-evaluating land valuations for the first time since 1996. The move will also increase prices of land being privatized.

Cadastral land values, from which property tax levels are calculated, could increase tenfold in more prestigious locations such as the Tallinn and Parnu regions as well as in coastal regions.

Cadastral property values in the remaining 90 percent of the country will increase by just 30 percent, said Aivar Tomson, project manager at the Estonian National Land Board, which not only maintains the land cadastre but also coordinates the country’s land reform.

Seaside plots on the western island of Saarema, where the most dramatic increases will occur, could increase in cadastral value 231 times.

But property owners need not panic, said Tomson. “There is only a theoretical possibility that the annual land tax will increase as much as the value of land,” he said. “I believe the county will decrease the local land tax rate so that the tax hike will be around tenfold.”

Heiki Kranich, Estonia’s minister of environmental affairs, will approve the new market values at the end of November and send them to Parliament for approval. The local counties will then have until the end of this year to decide whether they want to decrease property tax rates, which are their main income source. Counties are obliged to set land tax at between 0.5 percent and 2 percent of a property’s cadastral value.

Sulev Roos, governor of Harku county, west of Tallinn, said municipalities had little choice but to maintain land taxes as their only other income source is the national coffers. “If we decided to reduce the tax rate and asked for additional money from the state instead they would point to our low tax rate saying ?you did not want the money.'”

The 2 million kroons ($118,000) Harku county currently earns in land tax revenue would reach 7 million kroons if the present 1.2 percent tax rate were maintained after the property re-evaluation. “The municipal council will probably drop the rate to 1 percent,” said Roos.

Roos said the annual tax on his own 1.3 hectare property – currently 500 kroons – would increase to 8,000 kroons next year.

“I believe that most of the counties, which face steep increases in cadastral value, will decrease their tax rates,” said Tomson. “Taxes should not reach the level where one has to start selling one’s land because of financial difficulties.”

But Maids Praks, governor of Loksa county, protested that the increases being envisaged were too great and said that across-the-board tax reductions intended to help poorer people in areas designated as high value would unfairly advantage people with large properties in low value areas. “The planned increase is out of proportion,” he said. “It’s clear that some residents will have to sell their homes. If we drop the tax rate in order to save poorer coastal residents from a tax hike, residents would also pay less. Local governments cannot redesignate zone areas but have to introduce joint tax rates for everyone.”

Roos’ response to complaints about the proposals is frank, “They should not live there if they cannot afford it,” he said. There are about 500 summer cottages in his county, of which half belong to pensioners.

In the capital of Tallinn the cadastral value of residential property will increase by an average of 2.64 percent and commercial property by 1.77 percent. Cadastral values, which depend on which of 34 geographical zones in the city a property is located in, are set to multiply by 20 in areas currently designated to be of the lowest value.

According to Tomson, Tallinn municipality has discussed decreasing the tax rate to 0.9 percent or 1 percent. The Nomme region has proposed setting the tax at the lowest possible rate, 0.5 percent.

In Parnu, where the municipality currently charges the maximum possible tax rate of 2 percent, the authorities are unwilling to reduce it. The city government believes reducing tax rates is a bad solution because valuations of property in predominantly commercial areas have been based on the market value of a few unrepresentative properties. “The cadastral value should be realistic. It should take into account the city’s future plans and local situation,” said Taimi Vilgas, deputy mayor of the town of Parnu.

Mait Talvoja, head of the municipality’s business department, also objected to what in some cases are twelvefold increases. “The present tax rate and the cadastral value, which earned the municipality 8.5 million kroons last year, were acceptable. We do not agree with the new land evaluation results.”


Eesti Energia announces big price hikes

The Baltic Times, TALLINN
By Kairi Kurm
Oct 18, 2001

Estonian energy monopoly Eesti Energia has announced that electricity prices will rise by an average of 33 percent for residential consumers and 5.6 percent for low-voltage business customers starting April 2002.

The move comes after demonstrations this month against a new standing charge to pay for electricity distribution regardless of the quantity consumed.

The utility said it was restructuring prices to end the subsidizing of domestic consumption by business.

“As of the spring of 2002, there will be no separate price lists for residential customers and business customers, and all customer groups will have equal rates,” said Jaanus Arukaev, marketing director at Eesti Energia.

Eesti Energia has established eight different packages for its customers. The highest residential rate will rise from 0.91 kroons ($0.05) per kWh to 1.10 kroons per kWh, and the highest business rate will rise from 1.08 kroons per kWh to 1.10 kroons per kWh.

Under the new system some business customers may even see a drop in prices, particularly Eesti Energia’s most important business clients, who have individual contracts with the company.

Arukaev attempted to discourage those with electrical heating systems from switching to gas, saying that gas prices will rise by 50 percent next year.

The new pricing system meant electricity prices had reached European levels and would not increase further, he said. “Electrical heating is the most convenient form of heating. One can turn it off during the day and move the heating system from one place to another. It does not freeze and the preliminary costs of switching to electricity are low.”

The company’s main justification for the price hike was that Eesti Energia should operate profitably and, prices should cover the cost of electricity generation.

Eesti Energia plans to break even in the current financial year, ending in April 2002, and to earn a profit in 2003.

“The market situation is not good and exports are dropping constantly,” said Arukaev. “The main reason is that Estonia’s energy market is the most liberal in the world, certainly more so than Latvia’s and Lithuania’s. Sales are also decreasing because industries that once consumed a lot of electricity inefficiently are folding.”

Last year the company had a net loss of 4.56 billion kroons on a turnover of 4.56 billion kroons. It attributed its losses to depreciation of its assets from 16 billion kroons to 14 billion kroons.

Margus Kasepalu, spokesman for the Energy Market Inspectorate, expressed approval for Eesti Energia’s new pricing system.

The company’s separation of its electricity production business from network services was also a positive move, he said.

“The network service wants to earn some revenue regardless of whether the electricity is used or not.”

A monthly 20 kroon distribution fee payable by all customers would guarantee high-quality electrical power at all times, said Arukaev.

He acknowledged that people who use only a few kilowatts annually at summer cottages, for example, must pay at least 240 kroons a year for distribution – something which prompted protests by residents’ associations, pensioners and trade unions outside the Economy Ministry on Oct. 3.

According to Aino Runge, of the Consumer Protection Union, the electricity bills of the poor, who try to save money on utilities, are currently around 40 kroons per month. The new prices will mean them paying an additional 11 kroons on top of the 20 kroon monthly fee. “The new prices would hit the poorest people the most. We have about 1,500 customers who earn from 1,400 kroons to 1,600 kroons a month. They go to bed early and wake up early in order to save electricity. They have to count each cent,” said Runge.

According to Arukaev, Eesti Energia together with the Ministry of Social Affairs will launch a special social program in order to alleviate the effects of the price rises on poorer households.

Previously, electricity was not considered a basic necessity and was not compensated for. But last year 60,000 of Eesti Energia’s 584,000 domestic customer received support from the ministry, 10,000 of them on a regular basis.

Arukaev said that Estonia’s electricity prices are lower than in Latvia and Lithuania, adding that electricity would still be 30 percent more expensive in neighboring Finland after the rises.

Kasepalu said that electricity is probably slightly too expensive in Estonia because of the environmental expenses incurred in generating electricity from oil shale. “We can’t help it. In future we will have cables,” he said referring to a planned underwater power cable between Estonia and Finland to be completed in 2004. “Maybe it will have a positive effect for consumers.”

Estonia’s competitiveness clear from yearbook

The Baltic Times, TALLINN
By Kairi Kurm
Oct 18, 2001

Estonia ranks 22nd among 49 countries surveyed in this year’s World Competitiveness Yearbook, which is published by the International Institute for Management Development based in Lausanne, Switzerland. The survey’s aim is to inform potential investors and local authorities alike on a country’s international competitiveness.First place goes to the United States, followed by Singapore and Finland. Rounding up the survey, at the bottom, are Indonesia, Venezuela and Poland. Russia comes in at number 45. In this survey Estonia leads such economically developed countries as Spain, France, Japan and Korea. Estonia’s competitiveness is 40 percent that of the U.S. level.

“Estonia’s 22nd place is a good and significant message to foreign investors and promotes recognition of the country’s economic policy,” said Leev Kuum, researcher at the Estonian Institute of Economic Research, the publisher’s partner in Estonia. According to Kuum, a total of 286 criteria were taken into account in the study, two-thirds of which consisted of statistical data, and the rest, the so called soft data, gathered through a survey that was carried out among 100 of Estonia’s top managers. “The competitiveness reflects first and foremost the country’s ability to sell its products abroad,” said Kuum. He said that the research took into account the country’s small size and can thus be considered “a product balancing science and the arts.”

Estonia’s biggest strengths, as brought out in the survey, are its high level of services’ exports, well developed foreign trade, a large share of women in the labor market (48 percent), low internal and national debt and a high level of annual labor productivity increases. The other pros mentioned include the country’s low prices and a large share of foreign direct investments. At the same time, Estonian citizens are among the most literate of the 49 nations surveyed, placing second after Slovakia, with only a 0.2 percent illiteracy rate. India, which holds the last position in this category, has an illiteracy rate of 47 percent.

The country’s negatives are, its inefficient use of energy, a lack of qualified labor, including engineers and management, and low labor productivity. The businessmen questioned found that it was difficult to hire foreign labor and to get export credits and insurance. Estonia ranked in the last position regarding its huge foreign trade deficit, as a percentage of its GDP, and in 45th position with its high state budget deficit, which totals 4.7 percent of its 1999 GDP.

“Part of the information used in the survey derives from 1999,” said Marje Josing, director of the Estonian Institute of Economic Research. “We hope that Estonia’s position will improve next year because the exports in 2000 were quite good,” she said.

Raul Malmstein, deputy secretary general at the Ministry of Economic Affairs, said that the state’s average expenditures on research and development, which equal 0.75 percent of the GDP, have to be increased to the European average of 1.8 percent within three to four years. He said that the share of the private sector’s research expenditures, which is 0.15 percent of the GDP today, should outstrip the state’s spending in the future. “Estonian companies depend on foreign outsourcing and are thus not interested in further developments or in increasing their productivity,” said Malmstein. “The other problem is the country’s low awareness abroad. A product advertised as ?made in Estonia’ does not entice a consumer to reach for it. Estonia’s brand identity project should improve this and help bring tourists to Estonia and boost our exports.”

According to Malmstein, the proportion of private companies to population is two times less in Estonia than in the European Union, where there are 51 companies per 1,000 people.

The 49 countries surveyed in the book are not the most succesful among the world’s total of 220 but are the ones with the most interesting economies, said Josing. The survey did not cover Latvia or Lithuania. Estonia was included in this yearbook for the first time thanks to the efforts of the former head of the state-run Estonian Investment Agency, Agu Remmelg, said Josing. The International Institute for Management Development is one of the most well-known business colleges in the world, staffed with some 50 professors and spending 20 percent of its budget on research.


Baltic airlines eye price hikes

The Baltic Times, TALLINN
By Kairi Kurm
Oct 11, 2001

Citing an increase in insurance costs connected to the Sept. 11 attacks, Baltic air carriers are considering raising ticket prices 3 percent to 6 percent.Estonian Air raised prices between 3 percent and 5 percent on Oct. 3, an increase of 200 ($12) – 400 kroons, said spokesman Raimond Made.

Unlike Latvian and Lithuanian airlines, Estonian Air canceled flights and operated leased aircraft on its most popular routes from Sept. 26-28, while it was negotiating new insurance coverage.

Insurers worldwide increased costs for coverage of terrorism and acts of war, which is required for air carriers. Estonian Air said last week that costs for the insurance had risen seven-fold since the attacks.

Like airlines around the world, Estonian Air has seen a drop in ticket sales.

?We have less passengers than usual. It’s the general unstable situation on the aviation market, which keeps people from flying,? said Made.

Estonian Air, which had previously planned to make its first profit since its privatization in 1996, is now facing the likelihood of less optimistic results this year. According to Made, profits could be 5 million to 10 million kroons lower.

Estonian Air is partly owned by Denmark’s Maersk Air (49 percent), the Estonian government (34 percent) and the investment bank Creso Investeerimisgrupp (17 percent).

Latvia’s national airline airBaltic is considering fare increases of up to 5 percent beginning Nov. 1 to cover higher insurance costs.

But the company has managed to keep its planes flying.

?We managed to negotiate with the insurance brokers within a short period of time and could thus handle services without any interruption,? said Vija Dzerve, the company’s spokeswoman.

According to Dzerve, ticket demand increased 16 percent in September compared to the previous year and the figures for October were promising.

?With this unstable situation it is hard to predict whether we will keep this trend,? said Dzerve. ?Maybe the rise would have been bigger if the Sept. 11 tragedy would not have happened. We hope to end the year breaking even.?

In 2000 the company reported its first profit , 77,000 lats ($125 000), on a turnover of 24.94 million lats.

The airline is majority owned by the Latvian government. Scandinavian Airlines Systems is the second largest shareholder. Lithuania’s national carrier, Air Lithuania, is 100 percent state owned.

?We don’t know whether we will increase the prices at all. Maybe we can find another solution,? said Romas Gegznas, general director at Air Lithuania. ?It depends on how our competitors will do. The increase may be between 4-6 percent, no more.?

He said ticket sales have not yet declined.

?The demand has been increasing every month, even in September. We expect a 10 percent increase in passenger traffic for 2001 compared to last year,? said Gegznas. ?It’s hard to predict economic results for 2001. The first half of the year we operated unprofitably, but for the third quarter we predict a small profit. The turnover will rise 5 percent over the previous year.?

Wood processor looks for investors

The Baltic Times, TALLINN
By Kairi Kurm
Oct 11, 2001

Plans for a share issue by Viisnurk, Estonia’s leading wood processing company, have been canceled due to continuing market instability.

Instead the company is to focus on attracting specific, large investors to finance the expansion of its furniture factory.

The subscription period was initially planned for Aug. 21 until Sept. 10, but due to steep falls on equity markets and increased volatility in share prices the issue was at first extended until Oct. 1 before being canceled entirely on Sept. 28.

According to Toivo Kuldmae, development director at Viisnurk, the issue was canceled after the emergence of a number of serious investors who were interested in acquiring bigger stakes than those on offer.

?Despite the cancellation, Viisnurk will continue to implement its expansion plans, taking into consideration changing conditions in the external environment,? said Kristel Kivinurm, director of Trigon Markets, which was to organize the issue. ?The cancellation will have no impact on the company’s day-to-day economic activities,? he continued.

Viisnurk intended to issue 850,000 shares at 44 kroons ($ 2.59) each, slightly higher than the price of its existing shares at the time of the issue. A sale would have increased the company’s share capital by 16 percent to 53.49 million kroons.

Viisnurk (meaning ?pentagon? in Estonian) produces a quarter of the world’s cross-country skis. In the year 2000 its ski factory produced over 300,000 pairs of cross-country skis and about 40,000 hockey sticks.

Its skis are mostly exported to Finland, Austria, Norway and North America under such brand names as Karhu, Peltonen, Jarvinen, Rossignoli, Atomic, Intersport and Madshusi.

Due to unfavorable weather conditions the ski market has declined in recent years, but because hockey is mostly played indoors, demand for the company’s hockey sticks has increased. They will shortly be used by teams in the National Hockey League, though under a different trade mark.

?We’ve been engaged in hockey stick production for two years and reached the top level very fast,? said Kuldmae. ?In the future we plan to market our production more under our own trademark.?

As well as increasing its share of the Baltic states’ furniture market the company hopes to use the money raised at the share issue to boost hockey stick production.

Although Viisnurk’s stock is of a low liquidity, analysts believe the company will grow substantially in the long term. It ended the first half of 2001 with net sales of 144 million kroons, 18 percent higher than last year, and a net profit of 18.5 million – 35 higher than last year.

?The company is fundamentally in a good sector,? said Urmas Riiel, analyst at Hansabank Markets. ?Employment conditions and the climate in Estonia are very advantageous for Viisnurk.?

Kivinurm said that Viisnurk had one of the best growth potentials among companies listed on the Tallinn Stock Exchange.

?It has continuously increased its turnover and maintained good margins. The company’s management has started new development projects, which are well planned. They have a good and motivated management and with its investor web site, Viisnurk is also one of Estonia’s most investor friendly companies. Furniture sales will continue to be behind the company’s rapid growth.?

The company’s major investors are Baltic Republic Fund, with a 59 percent stake, and Merita Bank, whose clients control 11 percent.

A number of investors are thought to be interested in buying the Baltic Republic Fund stake.

Kuldmae said the company was planning to focus on its four major business units, including furniture and to outsource technical services and heat energy production.

Only a small part of the company’s furniture production is sold in Estonia, while its biggest export markets are Sweden, Finland and Germany. In the first half of 2001 Viisnurk’s furniture factory made a 13 million kroon profit on a 77 million kroon turnover.

The sales of the softboard factory amounted to 38 million kroons in the same period, while the ski factory’s turnover reached 16 million kroons during the first half of 2001, 8 percent less than the previous year.

The fourth major business is the new wood panels factory, which cost about 100 million kroons to the company.

Hansabank Markets predicts a 385 million kroon turnover and a 42 million kroon profit for Viisnurk in 2001, while Trigon Markets estimates its turnover will be 354 million kroons and its net profit 35 million.

Medieval building – home for rich tourists

The Baltic Times, TALLINN
By Kairi Kurm
Oct 11, 2001

Tarmo Sumberg, an Estonian businessman, is planning to turn Tallinn’s medieval building complex Kolm Ode (Three Sisters) into a small exclusive hotel.Sumberg, who had been the CEO of the Reval Hotel Group for 10 years and owned part of the construction company Koger and Sumberg, bought the building at an auction in July from the city of Tallinn for 9.8 million kroons ($576,000).

Sumberg, who presently runs the Estonian Tourism Board and is a consultant for Prime Minister Mart Laar, was the only bidder for the property.

He said it was going to be his major business concern in the future.

Renovations are expected to begin in 2002 and the hotel, which will include 15 to 20 rooms, is to open sometime in 2004.

Sumberg says he plans to make the hotel the most expensive one in Estonia and will invest up to 30 million kroons in it.

?Why did I buy this? Because I liked it,? said Sumberg. ?It’s beautiful, precious and stately. It’s going to be my pet project. I’m not expecting a fast profit from it.?

Paul Oberschneider, head of the real estate firm Ober-Haus, which operates two hotels in Tallinn’s Old Town, said that Sumberg’s hotel is too small to be profitable.

?You need geographic scope and size,? said Oberschneider. ?Fifteen rooms is a hobby.?

Sumberg said that Ober-Haus’ hotel Park Consul Schlossle, which is also in a medieval building, is ideologically similar to his plans, but he doesn’t see it as a competitor.

The Kolm Ode building consists of three similar three-story houses that were built at the beginning of the 15th century. The biggest house was built around 1415 and the smallest one in 1451.

The triplex, which once belonged to three families, was turned into a one-family building after the son of one of the families and the daughter of another were married, said Sumberg.

The building has been reconstructed several times and belonged to several owners. It has a baroque door dating from 1651. The facade was partly changed in the 19th century and the inside was rebuilt in the 60s.

Kalli Holland, head of Vana Tallinn, which examined the architecture of the house, said: ?I wish the renovation had not taken place in the 1960s. There was a different attitude toward old things at that time. Everything was changed according to the fashion. The wood was painted dark and now we have a lot of work to do to get this paint off.?

She said that a nice rococo painting with two angels was found on the ceiling during the renovation a few weeks ago. Sumberg said that he was happy about the discovery, which he would like to expose to his guests.

?I hope the hotel will have a room with such a function that many people can go there and see the building from the inside,? said Holland.

Holland is happy about the investment being made in the building because it was in a run-down condition.

?It was gorgeous from the outside but disgusting from the inside,? she said.

Juri Kuuskemae, a curator at the Foreign Art Museum, said that he had dreamed of establishing a ?citizen’s house? museum in the building, where people could get a glimpse of life in medieval times.

?Rakvere and Tartu have such museums, but we miss it in Tallinn. The city of Tallinn isn’t rich enough to afford it. There are a lot of other medieval buildings in Tallinn where we could carry out this idea,? he said.

One-third of the buildings in Tallinn’s Old Town were built in medieval times, many serving as homes for the city’s merchants.

?These houses were built according to a single scheme,? said Holland.

The first floor was usually used as a business room and there was a door with a hook for hoisting bags onto the top floor. You can’t find similar buildings anywhere else in Estonia because of the destruction caused by frequent wars and fires.


New power cable to unite Baltic and Scandinavian power supplies

The Baltic Times, TALLINN
By Kairi Kurm and Aleksei Gunter
Oct 11, 2001

Work on a new underwater power cable between Estonia and Finland is set to begin next spring after the signing of a contract between Estonian, Finnish, Norwegian and U.S. companies on Oct. 9 in Tallinn.

The 315 megawatt, 70 kilometer long sea cable will start operation in 2004.

The projected capacity of the cable was increased from 200 megawatts to 315 megawatts because of strong interest from Nordic power engineering companies.

The undersea cable project called Estlink involves Eesti Energia, Finland’s Pohjolan Voima and Helsingin Energia, Sweden’s Granige AB, Latvia’s Latvenergo, Norway’s state-owned Statkraft and TXE Nordic Energy, a subsidiary of the U.S. company TXU.

Eesti Energia spokesman Erki Peegel said the Finnish company Pohjolan Voima would choose the final contractor in about a month. ?It will be a large international company, either Siemens, ABB or Pirelli,? he said. ?Next spring, work should begin.?

Commenting on the benefits of the project to Estonia, he said, ?For Estonia as a state, it is a chance to export its oil shale energy to Scandinavia and it is a significant step toward integrating with the European power engineering environment.?

Karlis Mikelsons, chief executive of Latvenergo, said: ?We are trying to participate in this project, because it is something new from a technological point of view as well as politically. It is also important for us to cooperate with such companies. The project is a new step toward the liberal market.?

Although Latvia mostly imports energy, it would be possible to sell energy generated by the country’s hydroelectric plants on the Nordic market during the three or four months when water levels are at their highest.

The Scandinavians’ motives are simple, said Peegel. ?According to their forecasts, in the next five years the production of electricity in Scandinavia will become less profitable and too expensive. They just plan to get cheap electricity.?

He declined to comment on the effect of the cable on energy prices in the region. ?Our energy prices would not rise to Finnish levels. On the contrary, in the long run, over 5-10 years, the cable will help stabilize electricity prices in Estonia.?

The cable is a step toward greater independence from Russian power supplies since once complete, electricity may be bought from Scandinavia in the event of a crisis. But, cautioned Peegel, ?The cable itself is not sufficient to separate ourselves from Russia’s energy system.?

The 100 million euro project is expected to pay for itself in about 10 years. A special company will be established to manage the project and take a loan to pay for it. According to Peegel, it has not yet been decided how much each participant will contribute.

First nature-friendly real estate project started

The Baltic Times, TALLINN
By Kairi Kurm
Oct 11, 2001

A peculiar environmentally friendly village is being established near Tallinn in Leppneeme to promote sod roofed houses and solar power.Real estate developer Kodumajagrupp, which asked the Estonian Fund for Nature for help, heads the project. Urmas Laur, Kodumajagrupp’s manager, said that many people are interested in buying homes surrounded by sea and forests.

According to Laur 44 plots will be sold on the 24-hectare land in Leppneeme, ranging in size from 3,000 square meters to 13,000 square meters and costing 100 kroons to 150 kroons per square meter. According to Sven Soomuste from Hansa Liising (Hansa Leasing), which is financing the project, there will be a large demand for the plots thanks to their privacy, surroundings and relatively low cost.

He said that a couple of kilometers closer to the city of Pirita prices range from 500 kroons to 600 kroons per square meter.

Hansa Liising offers loans to future occupants at 7 percent interest for up to 30 years.

?Most of the plots have two functions, with 10 percent to 20 percent being used as residential areas and the rest kept as forest,? said Laur. ?This solution is very advantageous for future villagers because the land is taxed in different ways.?

The Fund for Nature will set up landscape architecture that will be obligatory for all villagers, said Laur. The villagers will also be responsible for preserving nature on their plot.

?We hope that the competitive environmentally friendly technologies will be widely used in this project,? said Toomas Trapido, director of the fund. ?If this vision comes true, it is the environment that many people have subconsciously been dreaming of.?

Urmo Lehtveer, spokesman for the fund, said that it was possible to use solar batteries for producing hot water, heat and lightning. He said that a couple of homes would also be equipped with sewage treatment facilities, which is five times cheaper than traditional sewage treatment methods. Rainwater will also be collected from roofs and used in toilets.

Wind power could also be an option.

?Thanks to the sea breeze it is possible to use small wind generators for producing electricity for street lightning,? said Lehtveer. ?In the future it will be possible to separate houses from the joint energy networks and connect them to small private power plants.?

The first house is expected to be completed next year.

Aljona Kozlova, who lives in Leppneeme, said that she was happy about the newcomers and hoped they would bring more money to the county that could help to improve the roads, transportation connections and entertainment facilities.

?But from another side, I am not really happy about the forest becoming private property,? she said. ?If everything is sold out, despite their promises to take good care of it, all the old inhabitants will be annoyed with signs like ‘private property’ and ‘restricted area.?