Latvenergo, which from next year must pay 90% of its annual profit into the state budget instead of the current 70%, will borrow up to one billion euros over the next three years. Contrary to some suspicions, the money will be invested in renewable energy projects, not in the buyout of Tet and LMT, Inc. is told by the company’s Director of Communications, Andris Siksnis.
After the news released by Latvenergo on 31 October that the company had approved the prospectus for a medium-term eurobond programme, which over the next three years provides for borrowing up to one billion euros, opinion leaders on social media and opposition members of the Saeima put forward the version that this money is needed so that the state can finance the buyout of Tet and LMT from the Swedes.
A. Siksnis rejects such versions and explains that over the next three years the company will need to raise 300–350 million euros each year to implement development projects – wind power plants, solar power plants, hydropower plants, and battery energy storage systems (BESS).
“We are investing this money in investment projects in order to maintain competitiveness and prices for customers; therefore the benefit is for us and for society; the projects ensure development and a competitive electricity price, as well as reduce electricity imports. In 2024, 35% of electricity was imports, which we will replace. The Baltics are in an import position, and in such a position the price is higher than in Scandinavia. Thus – one of our goals is to secure an export position,” explains A. Siksnis.
He also emphasizes that all Latvenergo projects are implemented in line with commercial terms and that the company “has a very good investment grade credit rating, which ensures borrowing on good terms.”
The management board of Latvenergo approved the base prospectus of the medium-term eurobond programme on 30 October. It has been approved as compliant with the regulations by the competent authority of the Grand Duchy of Luxembourg, the Commission de Surveillance du Secteur Financier.
The bonds will be issued as needed, in several tranches in total not exceeding the amount set out in the prospectus – up to 1,000,000,000 euros. The specific terms of each tranche will be set out in the applicable final terms, which Latvenergo will approve separately. As with the bonds issued under previous bond offering programmes, the new bonds are not intended to be converted into shares, which means that Latvenergo is and will remain a company fully owned by the state.
Inc. has already reported that, contrary to what was planned during the preparation of the 2025 budget and approved in the Saeima – namely, that until 2027 state-owned capital companies would have to pay 70% of their annual profits into the state budget as dividends – the government has come forward with an initiative stipulating that already from next year the amount to be paid out in dividends must be at least 90%.
Originally published at https://inc-baltics.com/latvenergo-aiznemoties-plano-samazinat-elektroenergijas-cenu/
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