Government keeps distance on Elering/Alexela spat

Kaja Kallas (left) with Riina Sikkut.
Kaja Kallas (left) with Riina Sikkut. Source: Ken Mürk/ERR

Both Prime Minister Kaja Kallas (Reform) and Minister of Economic Affairs and Infrastructure Riina Sikkut (SDE) have been scratching their heads over how to solve a stand-off between state-owned gas grid distributor Elering and two private sector firms, over the status of a connecting pipeline at a Liquefied Natural Gas (LNG) terminal in Paldiski.

Minister of Economic Affairs and Infrastructure Riina Sikkut (SDE) says that, since the dispute is not political in nature, the state will not intervene. 

Sikkut said: "This is a contractual disagreement. The government has given the task to the Estonian Stockpiling Center (EVK) that if fuel retailer Alexela and holding company Infortar, who constructed the LNG berth at Paldiski, want to sell, then the state can buy the facility."

"All the other confusion surrounding it is unfortunate, and we have to deal with it," she went on.

Sikkut also said that the dispute between Elering and Alexela does not affect anything relating to the state. "It is important that people get access to gas next month," she said.

Meanwhile, Prime Minister Kaja Kallas (Reform) noted that the dispute was between a state company and the private sector.

Kallas told ERR that: "Elering belongs to the state and it communicates closely with the Ministry of Economic Affairs and Communications.

"This is not the dispute that has been taking place between Eesti Energia and Elektrilevi, where the government could clearly tell both companies, as they were state-owned, to stop it. This is a dispute between the private sector and the state , something which must be observed accordingly if the private sector wants to continue with it," Kallas told ERR.

ERR also asked of Kallas exactly what the state had done to avoid taxpayers' funds being used in order to prolong a lengthy dispute.

"For a start, in order to save taxpayers' money we have an LNG ship which was procured by Finland for €400 million, which we have access to, but that €400 million did not come out of the Estonian taxpayer's pocket," Kallas responded.

"Second, we have been making investments in order to build up the gas infrastructure. The state has kept pledges made to the private sector, but indeed, new demands are constantly being made, and these disputes are ongoing," she went on.

Elering connection at Paldiski. Source: Elering

The recent developments suggest that a lengthy, substantive court case may be looming, ERR reports; were this the case, Elering's legal fees would likely at least in part be on the taxpayer.

At the same time, minister Sikkut averred that the issue was of little interest to the public and the media in any case.

She said: "I don't know why this is being so sharply covered in the media. We are talking about signing a purchase-sale agreement. The public's expectation is that things will be clarified; the government has always had the sole plan of signing a purchase-sale agreement."

The changed security situation has led to worry, and clarification is needed to ensure security of natural gas supply, with the berth and its connecting pipeline – the aspect of the project overseen by Elering – needing to be completed as soon as possible, in order to make LNG ships docking at Paldiski viable.

She also noted that the project was the first of its kind in Estonia.

"With everything being carried out for the first time, the dirrerent parties may have different expectations, but these should be resolved among themselves, not via the media," Sikkut added.

Legal counsel for Pakrineeme Sadam, the legal entity set up by Alexela and Infortar which owns the berth, last week called Elering's actions "embarrassing" and paying €500,000 per month rent in order for the connecting pipeline, which links the berth to the national gas network, "the least that Elering could do."

For its part, Elering has said it wants to go to court to take forced possession of the pipeline connector, adding that the ensuing ground rent would cost €300 per year, as opposed to €6 million per year under Pakrineeme Sadam's landlordship.

Paldiski LNG terminal Source: Alexela/Infortar

Once up and running a vessel fitted out to carry LNG, such as the one now moored off Inkoo, Finland, could supply LNG to the berth via a ship-to-shore pipeline. The LNG is then regassified on the land, and piped to the national network.

Inkoo is also linked to Estonia via the undersea Balticconnector pipeline, opened in late 2019, and, in the opposite direction, to the LNG terminal at Klaipeda, Lithuania. The state also keeps natural gas reserves stored at an underground facility in Inčukalns, Latvia.

The invasion of Ukraine has made decoupling from reliance on natural gas imports from Russia a priority.


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Editor: Andrew Whyte, Aleksander Krjukov, Karin Koppel, Veronika Uibo

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