Privatization of state gas company almost complete

TALLINN - Finnish fuel company Neste became the third largest shareholder in Estonian gas distributor Eesti Gaas (EG) after buying up a 10 percent share in the company Sept. 23. Only Russian gas giant Gazprom and the German-owned Ruhrgas are larger shareholders.

The 47.5 million kroon ($3.4 million) deal has almost completed the privatization of the state-owned gas concern. Neste paid 12,500 kroons per share for the 1,000 kroons it bought.

Gazprom controls 31 percent of the shares but has the right to increase its stake to 41 percent. The same applies to Ruhrgas, which owns 21 percent of the company, but is interested in increasing its stake to 25 percent.

The Estonian government, which has announced that it is unable to support the huge investment plan and thus finds its participation in Eesti Gaas unnecessary, has decreased its stake to 12 percent and plans to eventually get out altogether. Both Gazprom and Ruhrgas have expressed interest in buying more shares. All other shares belong to small shareholders.

"The participation of foreign investors is very positive," said Vaike Pallo, Eesti Gaas financial director. "The Neste participation enables us to join the European gas system through Finland. We have gained additional resources for investments and we have increased our share capital four times."

According to Pallo, nothing will change for Eesti Gaas clients, especially because the Estonian government can still exert some control on prices through the energy law. The other strong regulator is the wide range of owners, he said.

Although Eesti Gaas officials say the company is stable and hasn't been affected by the Russian crisis, it will end the economic year with a small loss because warm weather hurt the sale of gas at the beginning of the year. Low prices for heating fuel, the alternative to gas, have also dented sales.