Energy, Estonia, Legislation

Estonia's annual mining volume of 20 million tonnes has been fully distributed, but VKG leaders want the state to deprive the state-owned energy giant Eesti Energia of the corresponding part of mining rights and give it to VKG.

VKG says that Eesti Energia Kaevandused mining volumes do not reach the maximum volume allowed with the mining permits, as Eesti Energia is not be able to mine the 15 tonnes a year allocated to it.

VKG explains the need to increase mining volumes with opening a new shale oil plant this year while another plant should be completed next year.

Eesti Energia has signed with VKG a contract of sale of oil shale that is in force till 2018, but the Eesti Energia does not want to sell the precious stones at production price, but at a much higher price.

VKG threatens to close its two Kiviter factories and leave hundreds of people unemployed if the state does not increase the VKG mining volume.

Eesti Energia told Public Broadcasting that the mining rights can be reallocated only under voluntary agreement of holders of the rights and if a precedent was created, that mining rights would be taken from one company, with the state's decision, and given to another company, investments in oil shale processing would become much more expensive, because mining rights would not be no longer a guarantee that the maker of investment will have oil shale to process.

Eesti Energia has an approved strategy under which the company needs the mining rights for building new oil plants and guaranteeing the state's electricity generation supply reliability.

Eesti Energia has used over the years the majority of its mining rights or an annual rate of 80-90% and even 96% in 2011. Eesti Energia said that the company has ability of using the whole annual limit of oil shale in its oil shale power plants and oil refineries and the actual use has been lower than that when electricity market prices have been low, and thus here has been no need to produce more.

Eesti Energia added that for energy security sake, it needs to have the option of using its whole annual mining right.