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Tuesday 16.01.2018 | Name days: Lida, Lidija

Businessman Pumpurs and ex-prime minister Gailis take up alternative energy

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, Millionaire and businessman Uldis Pumpurs

Millionaire and businessman Uldis Pumpurs

Millionaire and businessman Uldis Pumpurs together with Latvia ex-prime minister and a businessman as well Māris Gailis is to start up a wind farm business to produce energy.

They both see great potential in this sector, however there are many challenges as well. The business news portal BNN found out in an  interview with the businessman he believes the quota allocation system is not fair, at the same time he reveals his Užavas alus (Užavas beer) brewery is currently working on conquering the Russian market and even considering opening a new brewery in there. Moreover, the businessman does not intend to sell Užavas beer, because it is a family business.

Is is true you are planning to pass over the franchise of Užavas alus brewery that you set up in 1994?

I don’t think so. We are currently employing the best German technologies there are to produce live beer. I have invested millions of euros in Užavas alus, but I would not like to give specific figures. Having built Užavas beer factory, I applied to European Union funds of 600 000 lats, however I lost 700 000 because of the bureaucratic procedure hindering launch of production work. So I had to use my own money to build it.

Tourist groups have already booked tours for May. The fact they get an inside-look is a great promotion of the brand and the souvenir shop makes good money as well. The same investors that have acquired Aldaris, Līvu alus (Līvu beer) and others have approached also me, proposing to purchase Užavas brewery owning 4% of the market. I have been very strict about this. The company will not be sold, because it is a family business. It will only be developed further.

Do you export to Latvians in Ireland or Great Britain, for example, to Lithuanian or Polish grocery stores?

I did send some small volumes with the help of a Latvian whose daughter had opened a store near London.

You had good light and dark beer, why did you launch yet another Užavas alus, a much cheaper one?

Initially, we intended to create semi-alcoholic beer for drivers, so that they could take one and still drive safe. Then, according to marketing laws, we developed a lighter beer Užavas alus with alcohol content – 4.2%. It is especially for women and those who do not want to get dizzy that fast. It sells well in summer. There are as many tastes as there are beer drinkers. It is much cheaper in wholesale, but stores surcharge a lot, even 100% due to Užavas brand.

Who is the business partner helping you to enter Estonian stores?

It was exactly when you called me to decide upon the date of the interview. A representative from Estonia was visiting, but I am not actually satisfied with the way how he did it. He made a lot of promises, but they reality turned out to be completely different. I believe most to what I do myself, not what others tell me. Estonians know my production. However, I see Russia more prospective than Estonia. Russians have set 60% import duty on beer, but the market there is huge. We would make two to three santims per bottle in Russia. Hopefully, they will join the World Trade Organization soon, which would make them revise import duties. I will then consider building a brewery in Russia, because there are millions of beer drinkers. I believe the basis of a business should be formed by the owner himself. Only then you can pass it to a decent management, but you still have to keep in touch with everything.

Do you have reliable business partners to help you with starting up a brewery there?

Most likely you know already that I am in oil business as well. Once, as a terminal Board Chairman of SIA Puses and Ventspils nafta (Ventspils Oil), I worked with Russia and befriended their Energy Minister, Transneft representative, etc. One of them is personally facilitating my entrance in the Russian market. In business, everything depends on people with knowledge about how to enter, they now the right corridors. So most likely I will be successful there. I have already transferred money for Russian products certification commission’s visit in Užava. There are positive reviews. From the business perspective, entering Russia would be more profitable for me when it is hot summer, because it is the period of the most beer consumption. Russian beer (Baltika etc.) tastes the same under a number of brands, because Carlsberg dominates the breweries. It is for mass consumption. Life is so interesting, we should not forecast many years ahead. Russia is changing very fast.

It was the right decision to develop ports in Primorsk and elsewhere, however just recently Russians have learnt to consider money and appreciate cheaper oil transit. So SIA LatRosTrans empty pipeline might be supplied again. Our greatest mistake was we did not accept them as shareholders and partners in Venstpsils nafta. No one has said we have lost to Mažeiķi refinery for good. We should not service Venezuelan oil export through Belarus, though, because this would have a negative effect on our economic relations with Russia. It is another thing if Belorussians purchase a potassium salt trans-shipment terminal in Ventspils.

Is Latvia already past the low point of the crisis?

I do not see it. It is only a talk of populist-politicians. Thanks God, we are in good relationship with our neighbours – Sweden, Germany, Great Britain and Russia – they want to get us out of the dip. We ourselves are not moving anywhere. We have not launched anything new. This policy of the government is crazy. I am a graduate of Higher Party School, I was Secretary of the Communist Party and my diploma paper was exactly on personnel selection. Why am I telling all this? I believe if someone wants to head a ministry or the country, he or she has to climb the carrier ladder from the very bottom. It is an absurd to appoint department managers as ministers. It should not be this way.

Is it still the right moment for investments in alternative energy?

We are in good relationship with the ex-prime minister Māris Gailis, so I proposed taking up wind farm business. In the Soviet years, I was agro-industrial complex Chairman. Four persons from Latvia, including me, were sent to Denmark to learn from their alternative energy experience. No one was interested in that back then. Together with Gailis we are currently developing this business in Ventspils district. Quota allocation system is completely wrong, because we do not feel any support from the part of the state. VAS Latvenergo should help private businesses, in order we could launch green energy production as soon as possible. In the West they help building electricity lines and connections, but it is on the contrary in Latvia. Economy ministry should take care of this sector more, so that we were independent in energy, but this needs a political decision.

When will you start extracting oil at Gudenieki deposits said to have 700 thousand tons?

I told in an interview we could extract up to 140 thousand tons from there. My land is at the top of oil deposits, because the deepest layers of oil are exactly under my property. I obtained discs from Moscow with research data of 1980s. I am aware oil business is difficult. There have been small activities since 2003. That territory is too small for two. Businessman Pēteris Šmidre got a research permit from Economy ministry, also for the land owned by Gudenieki rural district. The invited specialists might be simply fooling around with Šmidre. The slightest mistake with drills or too fast pumping would spoil the land for 20 years, because of groundwater level rise. I have halted my activities there, neither do I spend money on that. I have prepared letters to Mr. Smidre and Economy Ministry, saying that you always have to share in business.

Together with Vasīlijs Meļņiks you own AS Deal, which intends to turn the river Daugava into a navigable waterway to Vitebsk. How is this project doing?

Economist Uldis Osis has already drafted a business plan. We asked him to go to the Netherlands and Brussels to find out whether the European Union (Editor’s Note – including the European Investment Bank) would be interested in this project. We were clearly signalled EU authorities are to claim reports from all member states on the efficiency of inland waterways. I am not an enemy neither of Daugava, nor nature. We cannot do it as long as the possible environmental impact has not been researched. Water ways are slower but five times cheaper than railway cargo and 60 times cheaper than road transport. Moreover, they are more ecological as well. I am not saying it should become a navigable channel as Suez or Panama. We do not intend to damage Daugava, because it must keep its natural flow and beautiful bends. The world has invented a special lift system to transfer barge-type vessels across hydro power plants . Fish paths should be arranged as well, because salmon used to spawn in Daugava.

According to our estimates, the project costs could amount to two billion euro. The Transport Ministry with Kaspars Gerhards as the Minister at that time developed a «formal» work team to research the project. Gerhards, himself being a nationalist, told us unofficially he did not want to let Belorussians near the Baltic sea. Meanwhile, Belorussians have advanced building new hydro power plants by Vitebsk and Polotsk. Letters of intent with Belarus and Ukraine were signed already during the first government of Ivars Godmanis, but we did not comply with them, as Alfrēds Čepānis told me. Latvia has not yet organized constructive discussions with Belarus on what they could transport and do in this common project. Belarus is following the diplomatic etiquette, they are not publishing their plans without having coordinated it with us. It would be easier to reach an agreement between two states. We must see whether this would pay off.

Those involved in railway and ports transit fear our ambitions, setting various obstacles in our way. Two additional hydro power plants on Daugava would give the whole society cheaper electricity. 10% out of all the 163 000 jobless persons in Latvia would be employed in this project. Similalry, it would boost the development of the whole Latgale district. Why are such projects assessment based on emotions, instead of common sense? Environmental Protection and Regional Development Ministry funds should be used to arrange the banks of Daugava, in order they were not damaged by the stream. Life will teach our government to base their decisions on reality. I have met with the new and progressive Transport Minister Uldis Augulis, who affirmed if local waterways are economically profitable, they should be developed for sure.

Leave a reply

  1. wiii says:

    Is that the same former prime minister who travelled round the world in his yacht?

    Thumb up 0 Thumb down 0

  2. smatrii says:

    Those are businessmen from the old gang of Latvian business+gov elite that usurped the ownership of state enterprises and state property in self-interest. They reduce open competition of other small players by self-enclosed corrupt ties. Their legally-stolen money is still serving them well.

    Thumb up 0 Thumb down 0

  3. esti says:

    -Their legally-stolen money- my thoughts exactly!!!

    Thumb up 0 Thumb down 0

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