Maybe it is merely spring which only just began to blossom, filling our hearts with optimism; or, maybe, it is the result of the careful work done in Latvia during the years of crisis, but this week turned out to be quite rich in terms of good news.
One more ray of hope
In particular, experts of the Association of Latvian Commercial Banks (ALCB) report that our fair country is exiting the crisis situation far faster than previously anticipated. As a result of this, 2012 could become the third year in a row when the rates of development of Latvian economy will exceed all expectations that were formed in the beginning of the reporting period. According to the May bank review, Latvia’s GDP is expected to grow by 2.5%. Furthermore, the head Swedbank economist Martins Kazaks noted that the projections is carefully tailored, even from the point of view of our macro-economic indexes the year’s beginning was successful. However, the Eurozone could bring dire correction: with the situation there being as unstable as ever. But if the Eurozone actually manages to avoid serious risks, then Latvia’s economic development rates will reach 3.3% in 2013.
The positive tendencies noted in the national economy of Latvia in the beginning of the year immediately affected the banking sector in the first quarter. During the first three months the sector earned 38 million in income (excluding Krajbanka losses of 48 million LVL). The head of the ALCB Martins Bicevskis said, when assessing the situation as a whole, that the income and capitalization indexes were very good in both groups – those with roots in Northern Europe and those with business plans on the West.
The ports will have a coordinator
The government, even as slow as ever, began tidying up the «anecdote» of a port industry we have. During the latest meeting of the Port Council, its members approved the idea of creating a special state institution that will become the coordinator of all disjointed companies and organizations.
It seems that the government is not yet ready to introduce the principles of good managements in our ports the revolutionary way. However, members of the Cabinet of Ministers are prepared to turn to pincer measures in order to make the processes at ports more transparent. In particular, it has been decided, that port Board members are restricted from making any confidential work agreements, and from now on after the approval of every annual report, port authorities will then be obliged to publish it on their official websites. Also the proposal to introduce a specialization in large harbors was quickly refused, as well as the proposal to turn them into public joint-stock companies.
But the idea, voiced by the advisor of the Minister of Transport Kaspars Brishkens, about creating a new state joint-stock company that could potentially become the cornerstone of the Latvian transit industry, was warmly accepted by the meeting participants. According to the reporter, this kind of company will be required to fulfill several key functions. Firstly, it will become a sort of a face of the Latvian transit industry – a consolidated trader of the Latvian corridor to everyone, the organizer of marketing events (through participation on different exhibitions, trade mission, etc), as well as an one stop agency for the requirements of potential shippers. This way they will be relieved of the necessity to contact multiple local services, firms and offices, when trying to determine what it would cost them to send products through Latvia. By turning to this state joint-stock company the client will be able to receive the same unified tariff hotly debated over for a long time.
The Ministry of Transport believes that the creation of this new enterprise will not end up being a long and grueling process. It is expected that the government will receive a more detailed proposal on the structure, functions and other key parts of the said company in June. The theoretical decision about its creation could be made in the end of this year. If everything goes smoothly, then the new state joint-stock company will be able to influence the realization of Latvia’s interests in such projects as the organization of the backwards NATO transit, supplying parts for the Russian auto industry and others.
Latvia receives a piece of a NPP
The government of Lithuania has approved the concessional agreement with the strategic investor of the Visagina NPP project – the Japanese Hitachi concern. The agreement is due to be signed by June 28, 2012. As the Lithuanian Minister of Economy Rimantas Žylius claims, the expenses for the project’s realization, according to the latest calculations, are expected to be around 17.3 billion LTL (3.46 billion LVL).
It is expected that Lithuania will receive 38% of shares of the company operator of the Ignalina-2. Estonia’s share will be 22%, and Latvia – 20%. Hitachi will receive the same amount as our country. After the signing of the concessional document, preparation works costing around one billion LTL (200 million LVL) will go on for 30 months. Lithuania is expected to pay one third of these expenses. After its completion in 2015 the final investment agreement will be signed. The construction is scheduled to commence before the middle of 2016. The NPP is expected to become operational by the end of 2022.
As the Lithuanian Minister of Energy Arvydas Sakmokas noted, the cost of electricity produced in the Visaginas NPP will be around 7-10 Lithuanian cents (1.4-2 santims) KWh for the first 60 years. Taking into account the cost of loan repayments (this process will take 18 years) this price will grow up to 17-25 Lithuanian cents (3.4-5 santims) KWh.