According to the ministry, five state-owned companies are to be divested: Teede Tehnokeskus (Technical Center of Estonian Roads), Operail, Nordic Aviation Group and Transpordi Varahaldus, while the state would also reduce its stake in AS Tallinna Sadam to 51 percent.

In addition, two subsidiaries of Eesti Energia – Enefit and Enefit Green – would be partially privatized, according to the proposal by the Ministry of Finance.

Estonian Minister of Finance Mart Võrklaev (Reform) said that the state ought to be the owner where necessary, and that for non-strategic purposes it is wiser to allow companies to operate independently.

"For example, we have state-owned companies that are already partly listed on the stock exchange, and now it is a matter of considering whether it would be expedient to direct more holdings to the investment market," he said.

"Today's agreement by the government gives ministers guidelines to begin preparations for privatization. They will come to the government with concrete divestment decisions once the groundwork has been done," the minister explained.

Võrklaev: Benefits of floating energy companies on stock exchange will increase

According to Võrklaev, the partial privatization of the Eesti Energia group will improve the company's financial position, increase transparency and, if sufficient profits are made, increase its ability to pay dividends. "In addition, stock exchange investors would also have the opportunity to acquire stakes, which would stimulate the local capital market," he said.

Enefit will bring together the entire customer-oriented business of the Eesti Energia group, ranging from sales to installation of energy solutions in five markets from Finland to Poland. The company is involved in electricity and gas sales, solar solutions, energy storage, heat pumps, insurance, high-speed internet and electricity works as well as Enefit Volt electric car charging solutions. According to the plans, as much as a 20 percent stake in the company will be floated on the stock exchange.

Renewable energy company Enefit Green went public in 2021, with a 22.8 percent stake in the company currently listed. The plan is to go ahead with the privatization of an additional stake, with the government having a mandate to sell up to 49 percent on the stock exchange.

To raise money via the stock market, timing is crucial, for both the company and the economic environment, the finance ministry said.

The future of Elektrilevi OÜ and the options for privatization remain under consideration. According to the agreement, the first step will be to draw up a development plan for the electricity network and analyze its investment needs. The results will be presented to the government by the Ministry of Finance and the Ministry of Climate in May.

For three of the companies, the need to divest public shareholdings or to involve the private sector in the provision of services, will be subject to further analysis.

While for piloting company Eesti Loots and prison labor company Eesti Vanglatööstus, the process of liquidation, which had been decided on previously, will continue as planned.

For the remaining companies, the current level of shareholding will be maintained, with the next review due to take place within three years.

In total, the Estonian state has stakes in 28 companies. In 23 of those, the stake amounts to 100 percent.

Continuation of the privatization of non-strategic companies, in which the state has a stake, is one of the objectives outlined in the current government's action program.

According to the State Assets Act, the need for the state to maintain stakes in companies is assessed by the government ministries every three years. Divestment proposals are made when the objectives of state ownership have been met or are no longer necessary.

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