State-owned energy company Eesti Energia is not yet planning to make redundancies despite falling oil prices and low electricity prices.
Raine Pajo, Member of the Management Board of Eesti Energia said after a bad year in 2019, Eesti Energia had hoped this year the company would be able to stabilize. But due to the crisis this will not happen, ETV's "Aktuaalne kaamera" reported on Wednesday.
While oil production, despite the sharp drop in the global price of oil on which it is based, is now proceeding as planned, the company has cut electricity production by two-thirds. Pajo said no layoffs or production closures are currently planned.
"Inevitably, such smaller reductions will come and we will try to adapt to the other situation, and since we have both electricity and oil in our portfolio, we hope that both do not become unprofitable and that one will support the other," said Pajo.
Last year, oil shale power generation was hampered by the high price of CO2 emission allowances, which have now fallen. While a week ago the CO2 quota cost €25 a ton, now the price has fallen to €16. However, the stock market price of electricity has also fallen to below €16 per megawatt hour. So if one megawatt-hour of electricity from oil shale requires one tonne of CO2 quota, it is not possible to produce at a profit.
Pajo says production of oil shale electricity at the current CO2 quota price was €40-50 euros per megawatt-hour late last year.
"The fact that CO2 has fallen to low levels may give us a little hope that if the electricity price rises, we may be able to continue producing electricity in the second half of the year," Pajo said.
Minister of Economy and Infrastructure Taavi Aas says that if necessary, Eesti Energia employees can also be supported through a state aid package.
"Our state-owned companies, although state-owned, have operated under all market conditions, and no exceptions to EU rules have been made here, so we can apply for them to the unemployment fund," Aas said.
Aas adds that the state-owned dividend policy will probably have to be revised as well. The government also hopes that Eesti Energia's situation will improve in the autumn by allowing the use of wood chips to be used for power generation.
Editor: Helen Wright