The stealthy privatization of Eesti Energia

Last spring, when Minister of Finance Jürgen Ligi allocated Eesti Energia under the his governance (beforehand it was the subject of the Ministry of Economic Affairs), he pointed out that the issue of privatization concerning Eesti Energia is in a dire need of investigation and needs to be handled step-by-step.

As it happens to appear, Eesti Energia has been privatized “step-by-step”, writes Harry Tuul of the business daily Äripäev. Sandor Liive, the head of Eesti Energia has in the time span of five years sold partnerships of five firms, the majority to private enterprises. The most recent transaction saw the birth of Võrguehitus, which is company to focusing on the building of electrical and communication networks. The contract was signed with Leonhard Weiss, of German origin, and amounted to 7 million euros.

In addition to this, in 2012 Televõrgu stocks were sold to Tele2 and Kohtla-Järve Soojus, and the majority of shares were sold to the Viru Keemia Grupp. Two transactions have been also sealed with the state. In 2010 Elering was sold and last year when the associate company Estlink’s assets were sold to Elering and Fingrid.

From a business standpoint, these deals are reasonably well considered and a sensible arrangement, where Eesti Energia focuses on its main objectives and delegates the less important and profitable projects to other companies. Due to the fact that Eesti Energia is a public company, every transaction will be carefully investigated – just like listed companies for which investors and the public show a heightened interest. Although contrary to publicly listed companies, the state owned Eesti Energia presents its partial privatization to its investors as fact in hindsight. Justification as well as the effects to the company value is secondary.

The most efficient cure for this kind of behavior is to base one’s actions on the stock exchange rule. The plan to take Eesti Energia to the stock exchange, which was on its homestretch during 2010-11, was shot down by former Prime Minister Andrus Ansip. In vain, Tuul writes.

Source: ERR News