Latvian Parliament Approves Latvijas Gaze Split to Open Up Competition
In a momentous and market-changing decision, Saeima, Latvia's parliament, has voted to approve the splitting of utility company Latvijas Gaze into two companies and to open up the natural gas market to competition.
In a vote on February 11, MPs voted in support of a proposal that Latvijas Gaze must immediately provide third-party access to the gas distribution system, "by mutual agreement on the price for using the infrastructure." As a result of the proposal, Latvijas Gaze has been given until April 3 2017 to separate its gas transmission and storage services from its distribution and sales.Two separate entities will be created as a result of the separation, each with different responsibilities and operations.
Following that separation, the natural gas transmission and storage company must be legally independent from commercial operators that distribute and sell gas by a date of December 31 2017.
At present, Latvijas Gaze holds a complete monopoly in Latvia's energy market, controlling the import, sale, procures, storage, transmission, and distribution of gas in Latvia. It also has only one supplier--Russian major Gazprom, which is also a stakeholder in Latvijas Gaze. Currently, Russia's Gazprom holds a 34% stake in Latvijas Gaze.
As part of the same parliamentary vote, the government has also ruled that households must have the right to freely choose their own gas supplier and according to a tariff set by the regulator and sets out principles for sellers that aim to open up the gas market.
In a statement following the vote, chairman of the economics committee of the Saeima Romans Naudins said the vote was important to liberalise the Latvian market.
“Opening the gas market to free competition is a very important step for Latvia’s economy and business in general," he said. "By stipulating effective rules for the natural gas market, we are opening the door to new gas suppliers, thus promoting competition in the sector. This will be beneficial to both the public and businesses, and the opening of the market will ensure a stable and predictable energy policy in future."
Erica Mills