Energy, Gas, Latvia, Legislation

The committee approved a gas market liberalization schedule and conditions. Latvijas Gaze is to be unbundled by April 3, 2017 at the latest.

According to the amendments, this may happen sooner if one of the following happens: the natural gas distribution system in Latvia is directly connected to that of any other European Union member state, except Estonia, Lithuania and Finland, or if the dominating supplier's share of the total natural gas supply market in Latvia is smaller than 75 percent. However, the possibility of either is very small, as Latvijas Gaze and Economy Ministry's representatives told the committee today.

The conditions under which the company is to be broken up will be specified by the time Saeima begins review of the bill in the third reading, in order to avoid the risk of the state of Latvia being sued for violating the Latvijas Gaze privatization agreement, the committee's head Janis Ozolins (Reform Party) said after the meeting.

The bill that Saeima approved in principle in the first reading stipulated that Latvijas Gaze would be divided into several entities by January 1, 2015.

While the latest plan is that Latvijas Gaze transmission system operator is to be detached from the company on April 3, 2017, dividing the company's accounting system is to start already this year, and the transmission system is to be made accessible to third parties also from April this year, added Ozolins.

The bill supported by the committee today stipulates that the gas market will be deregulated gradually from April 3 this year until April 3, 2017.

As reported, Saeima supported in principle amendments to the Energy Law in the first reading on December 12 last year, to ensure third parties' access to Latvia's natural gas supply system.

At the moment, there is one vertically-integrated company in Latvia – Latvijas Gaze – that buys, stores, transport, distributes and sells natural gas in Latvia. Latvia's natural gas supply system is not connected to any other European Union member state's system, except Lithuania and Estonia, and Russia remains the sole supplier of natural gas to Latvia.

The objective of the amendments, drafted by the Economy Ministry, is to transpose the Third Energy Package of the European Union into Latvian legislation to ensure liberalization of the natural gas market of Latvia, encourage alternative supplies and competition on the market.