Daily: Eesti Energia preparing to devalue Utah and Auvere investments (2)
State-owned energy giant Eesti Energia is preparing to write off large investments made into projects in the United States and in Auvere, Estonia.
According to Eesti Päevaleht, Eesti Energia CEO Hando Sutter could devalue the Auvere power plant even before it is fully functional. The plant was a government decision and cost 640 million euros to build.
If such measures are taken, the company's credit rating will fall, hurting operating profits. This, in turn, would mean the state will collect less dividends from its largest cash-cow.
Former CEO Sandor Liive warned a year ago that 300 million euros could be written off from the Auvere project.
The 12,000 hectare plot of land Eesti Energia purchased in the state of Utah, in the United States, is currently unused. The land cost 51 million euros in 2011 and just holding onto it costs the company around one million euros annually. Sutter has said the Utah plot, which has oil shale rock in abundance, is far from any indusrty or cities and energy production would be logistically difficult.
The company's FEO Andri Avila said businesses such as Eesti Energia reevaluate assets on a regular basis. He said that one such evaluation is going on right now and no decisions have yet been made. According to Avila, a decision could be made in a few months time, after which investors and the public will be informed.