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Finance minister: Oil plant needs to be operational to recoup investments

Mart Võrklaev (Reform).
Mart Võrklaev (Reform). Source: Priit Mürk/ERR

Estonian Minister of Finance Mart Võrklaev (Reform) told ERR radio, that as €350 million has been invested in the new oil shale plant, it must start operating to recoup the money spent bey taxpayers and Eesti Energia.

According to Võrklaev, the plant, which was temporarily shut down following a Supreme Court ruling, must be completed and put back into operation. With millions of euros of taxpayers' money in addition to funds from Eesti Energia having been invested, simply leaving the facility, which is almost finished, stood idle, would be irresponsible to say the least, said Võrklaev.

"My view, as minister of finance and as the state's representative (in Eesti Energia), is that we have put a very large amount of taxpayer and company money into this. Now we have to get that money back. In 2019-2020, when the decisions were made, the risks were known, and in my opinion it was not wise to start making these investments. However, in a situation where so much money has been spent, we cannot make hundreds of millions of investments and just leave them standing there. That would be irresponsible," said Võrklaev.

The total cost of the plant is €350 million and, according to Võrklaev, almost all of that amount has already been spent. In 2019, the Estonian state decided to invest €125 million.

On Wednesday, Keit Kasemets, the secretary general of the Estonian Ministry of Climate, said that Eesti Energia has to analyze the economic feasibility of building the plant, as the country's new climate targets make it unrealistically expensive to operate at the end of its lifetime.

Võrklaev, who met with Eesti Energia chiefs on Friday, said after the meeting that he was confident that Eesti Energia would be able to meet its climate targets even with the construction of the plant.

"Now we have to find solutions with the Ministry of Climate regarding the permits and look for a way to provide clear targets (for Eesti Energia) for CO2 reduction via the owner's expectations. The company's CEO has these plans in place, he says they are feasible. Perhaps the company believes it is possible to open the plant, do so profitably, earn back the investments. And, at the same time reduce CO2 emissions in the group within 10 to 15 years in a way that aligns with the state's climate targets and does not impose a disproportionate amount of obligations on other companies or the state in general," said Võrklaev.

Last week, the Supreme Court of Estonia annulled the construction permit granted to Enefit Power AS for the construction of the new shale oil processing plant, due to errors in the environmental impact assessment. The court ruled that the municipality must continue with the procedure for granting the permit and correct the errors in the environmental impact assessment.

Narva-Jõesuu Municipality said it expects to issue a new construction permit for the plant within a few weeks. On Wednesday, Eesti Energia Board Chair Andrus Durejko, said that the completion of the oil plant had stalled mainly due to the Ministry of Climate, which has not yet approved Eesti Energia's environmental impact assessment, which has been pending since the end of June.

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Editor: Michael Cole

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