Stockpiling Agency managers: National reserves to be used as last resort

Priit Ploompuu and Priit Enok.
Priit Ploompuu and Priit Enok. Source: Anna-Maria Kurrel/ERR

The government will decide whether and when Estonia's national reserves of vital goods will be used, as this requires a crisis situation and the commercial reserves to be completely depleted, Priit Ploompuu and Priit Enok, board members of the Estonian Stockpiling Agency (ESPA), said, speaking on the radio show "Reporteritund" on Wednesday.

The Estonian Stockpiling Agency (ESPA) is in charge of procuring and managing five types of stocks: liquid fuels, natural gas, food, health and critical business continuity resources.

If a signal reaches the stockpiling agency indicating that businesses are experiencing supply problems or that there is another reason for a shortage in a specific area, a proposal to draw on national stocks is made to the Ministry of Economic Affairs, where this is taken to the government for a decision.

"We monitor the market and work with businesses—this is where the first indication of a market failure appears. We analyze the data and present it to the government for a decision. Public stock deployment does not happen overnight. Rather, this is the last line of defense, and yet these supplies are on hand and ready for delivery, however they will only be used in a serious emergency," Enok explained.

The size of the stocks varies depending on the sector and the need. For example, Estonia has three months' worth of liquid fuel on hand. In the past, Estonia held half of the liquid fuel supply, while Finland and Sweden had the remainder; now there is a move to bring more of our own stock into Estonia.

In Estonia, the liquid fuel reserve is the only national reserve that has been mobilized so far. This occurred last spring as a result of international cooperation, not Estonian initiative.

This means that Estonia has little actual experience of utilizing national reserves, Ploompuu said.

"Our policy is to store eggs in separate baskets. We do not keep all of our inventory under one roof; we have a reasonable geographical distribution. /.../ However, we have strategies in place should the government decide to deploy the stocks," he continued.

"It is not enough for one entrepreneur to say, 'I am short in the warehouses.' The government's decision must specify why we are using the stocks, how long and under what conditions they will be used and how they will be replenished," Enok said. 

Enough gas for the winter

The government decided in the spring to acquire the 650 gigawatt-hours of natural gas reserves. Additionally, Elering has a reserve capacity of 140 gigawatt-hours. This is sufficient for two months given Estonia's consumption, Ploompuu said. "Estonia's gas consumption has decreased significantly. We think that the gas storage facility and gas dealers have sufficient stocks to go through this winter," he added.

Because the state's gas supplies were acquired at a time when gas prices were at their highest, the state may be forced to sell gas to companies at a lower price than it paid for it. "However, if the stock is depleted, there is usually a crisis or a shortage and prices likely rise. Prices are expected to be high when we have to sell the stock, so we do not believe we would have to sell our stocks very cheaply," he said.

The agency is still working on the medicines stockpile and the first few procurements failed.

Companies that will also stockpile medicines in their warehouses are now sourcing them, Enok explained.

Last year, the ESPA took over responsibility for food supplies, which had previously been handled by the Ministry of Rural Affairs.

"We are now starting to look into the challenges we need to tackle with food. We have set the quantity in such a way that we have enough for a week's supply for a large evacuation, for example. At the same time, food storage is an interesting case," Enok continued, "we are storing food as raw ingredients as opposed to finished products."

For example, the state no longer buys cereals from sellers but instead enters into agreements with market participants on a buy-out price linked to the global cereal market price.

"We agreed that the company's warehouse must stock this or that quantity and that we have first refusal right. So when necessary—we are buying it out," Enok said.

Stocks are monitored

Companies under contract with the state hold the state's stocks and the ESPA organizes spot checks on the stocks.

"We are inspecting them randomly; we have agreed on when and what we will check, but we notify our partners 24 hours in advance that we want to see their stock. We try to visit and speak with them as often as possible, which gives us confidence that they are keeping our stock in good condition," Ploompuu said.

Inspections, Ploompuu added, have also revealed some instances where operators have deviated from agreements, but nothing major or significant.


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Editor: Kristina Kersa

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