Estonia’s Cabinet Targets Gas Unbundling by 2015 in Draft Bill

Estonia postponed by two years until January 2015 a deadline for separating AS Eesti Gaas’s natural- gas sales and transmission divisions, a move aimed at opening the market to competition.

The cabinet of Prime Minister Andrus Ansip wants to diversify gas supplies and increase supply security, according to a draft bill published by the Economy Ministry on a government website yesterday. The draft was sent to ministries for approval before it goes to parliament.

The bill is intended to liberalize the market through greater transparency, increase competition by allowing biogas to enter the market and establish the legal basis for building a liquefied natural gas terminal, according to a letter accompanying the draft.

Ansip’s Reform Party published plans last October for gas unbundling by 2013 to reduce dependence on Russia’s OAO Gazprom, the biggest owner of Eesti Gaas and its sole supplier.

Estonia, Latvia and Lithuania want to shift their energy focus to the European Union. Relations with Russia remain soured by mistrust of its political ambitions in the Baltic region. A year ago, Lithuania announced a similar plan at Lietuvos Dujos AB, bringing criticism from Gazprom and from Germany’s E.ON AG (EOAN), which also has a stake in Eesti Gaas.

Sale Stipulation

The draft bill includes a stipulation that Eesti Gaas’s transmission unit will be sold if no buyer is found and sets a fine of as much as 32,000 euros ($45,000) if the independence of sales and transmission is violated. It leaves open the option that a company based outside the EU could control the transmission network, subject to clearances from the competition board and the European Commission.

Transmission and sales of natural gas could also be controlled by the government, in which case they would have to be supervised by different ministers, according to the bill. In October, Reform lawmaker Igor Grazin said the option of nationalizing the transmission network would be dropped.

Last week, Estonia’s power grid operator, Elering AS, commissioned a unit of Poeyry Oyj, a Finnish engineering company, to analyze options for gas unbundling by Oct. 31.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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