On 29 May this year the Cabinet of Ministers decided to increase the share capital of JSC “Augstsprieguma tīkls” (AST) by 57.4 million euros, which is related to the loan taken at the Treasury at the end of last year for the acquisition of the shares of natural gas transmission and storage system operator JSC “Conexus Baltic Grid” (Conexus).

“Purchase of Conexus shares is an economically beneficial deal and it will in no way affect the power energy transmission tariffs. It is planned to cover the loan interest from dividends received by Conexus. Conexus profit in 2017 was 17 million euros, according to the proportion of shares held by AST the share profit of AST is 5.8 million euros, or about 10% of the purchase price. According to the decision of the Conexus shareholders’ meeting on the division of profit in May 2018, AST has received dividends of 4.8 million euros, which through the dividends of AST will return to the state budget. The rest of the profit is currently credited to the undistributed profits,” AST Chairman of the Board Varis Boks explains.

The most important objectives of purchasing Conexus shares are the formation of a regional natural gas market, further integration of Latvian energy markets in the European Union and improvement of the safety and competitiveness of the Latvian power supply. Similarly the acquisition of shares will increase the value of AST, the ability to attract funding, which is an important consideration for the company when dealing with the issue of ownership of uncompleted electricity transmission assets.

As it is known, at the end of last year AST purchased 16.05% from SIA “ITERA Latvija”, and 18.31% from the German energy holding company “Uniper Ruhrgas International GmbH” of shares belonging to the natural gas transmission and storage system operator Conexus.

The model, when the operator of a power energy transmission system is related to the operator of a natural gas transmission system, can also be observed in other Baltic states. In Estonia the state owned company Elering serves the operator functions of both power energy and natural gas transmission systems. But in Lithuania both the operation of the power energy system Litgrid, as well as operation of the natural gas transmission system Amber Grid is managed by the state owned capital company EPSO-G.

At the same time, on 29 May the government decided to transfer all state-owned Conexus shares to the Ministry of Finance, thus promoting the effective management of the state’s direct and indirect Conexus shares and the united state involvement in the management processes of Conexus.