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Wednesday 28.09.2016 | Name days: Sergejs, Svetlana, Lana
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Ventspils City Council loses a source of regular income – one million euros annually

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUVentspils City Council has lost a source of regular income worth more than EUR 1 million. Last year, Ventspils nafta terminals, which is part of Vitol-owned Ventspils nafta Group, had decided to forfeit the contract in accordance with which the municipality was being transferred a considerable amount of money annually – at least EUR 1 million – for the needs of the city’s public infrastructure, as reported by De Facto programme.

The company explains that it remains willing to donate money to charity projects. However, the company receives no benefits from this kind of cooperation with the city council. Explanations of the city council’s deputies in regards to the impact this will have on the budget are somewhat conflicting.

Ventspils nafta terminals is the largest oil and oil product handling company in Baltic States. The company has two co-owners: 49% of shares belong to Eurotank Holding Sarl, which is part of the international terminal company VTTI and 51% of shares are owned by Ventspils nafta. Vitol stands at the peak of the owners pyramid. Last year, Aivars Lembergs had criticized the concern for supporting London Chelsea football club and not Ventspils football club.

Information that Vitol may be one of Chelsea’s sponsors is most likely false – at least there is no publicly available information to support hits. Vitol representatives in Latvia also call it absurd.

It is true, however, that VNT has significantly reduced its expenses on sponsoring activities. Two years ago the company’s sponsoring expenses exceeded EUR 1.5 million. One year ago, this amount was only EUR 0.6 million. The main reason for the decline is VNT’s decision to end some old contract. Signed in 2003 and later extended to 25 years, the contract was titled ‘On oil and oil product transporting through the territory of Ventspils’. In short, this contract provided the following: Ventpils City Council agreed that VNT would handle dangerous substance without the city limits. In exchange, the company would transfer money for the needs of the city’s public infrastructure: EUR 1 million annually plus interest from expected revenue.

VNT continued to pay all these years: the total amount exceeds EUR 13.7 million. Last year, the company announced that it all the payments transferred to the city council over the course of the years are to be considered donations. In addition, the company added that it can no longer afford such generosity.

Lembergs claims that VNT has begun mixing aromatic hydrocarbons with products, which has only increased the smell coming from them. He said the city council had previously told the company about this. Vitol had apologized and refused to pay to the city council’s budget, according to Lembergs.

Lars Panclaf, the sole board member of VNT since 2009, admits – relations with the city council are currently rather tense. However, it is not the company’s fault. «The fact is that we work within the boundaries of the environmental permit provided to us. This permit has been in force for more than a decade. It has changed only insignificantly over the course of those years. Products listed in it have never changed; neither have the products we work with. With that, it is hard to believe that there may be some new smells in the products that we handle. Petrol smells, diesel fuel smells, crude oil smells, bio-diesel smells. […] It is not a problem – we as a part of VTTI Group work with other terminals. They use vapour collection systems and use them well. We will do the same if we find a way to install the machinery necessary for that,» – promises VNT Chairman.

Panclaf explains that it was not possible to install such systems in the past because the city council had not provided the company with the necessary construction permits. The situation is the same with other permits the company had requested in the past to develop.

Ventspils City Council likes to bring up the fact that Financial Times had called its strategy for attracting foreign investors the second best in Europe. Unfortunately, Financial Times does not mention contracts that provide for mandatory payments to the city budget. Lembergs claims support for the city depends on each company’s free will. «We have different companies that provide sponsorship: there are one-off sponsors, regular sponsors; those that sponsor sports, those that sponsor culture and those that sponsor city’s festive events. It is a normal practice. But all of it is voluntary. No one is pressured and no conditions are tied to contractual obligations,» – Lembergs claims.

In reality, however, the correspondence between Ventspils City Council and VNT demonstrates something else entirely. The city council’s executive director Aldis Abele wrote in a reply to the company’s decision to end the aforementioned contract that the city council does not agree with such a turn of events and demands the contract to remain in force until the end of 2032. In addition, Abele threatened to apply a fine for delayed payments.

Two weeks ago, Ventspils Vice-Mayor Janis Vitolins had sent a letter to VNT. This letter made it abundantly clear – in addition to last year’s payments, the council expects nearly EUR 2.5 million from the company this year. This amount is formed by the unpaid amount left over from 2015 – EUR 868,000; last year’s missed additional payment of EUR 213,000; the expected payment for 2016 – EUR 1,157,000 and the additional payment for 2016 – EUR 213,000.

The letter also contained reports in regards to the use of provided funding and planned projects. The list contains general names of planned events. For example, ‘Measures and activities for development of public infrastructure’, which cost EUR 226,500 last year. EUR 827,000 were spend on an investment project titled ‘Development programme for Ventspils city infrastructure – development of public infrastructure and improvement of quality by means of enhancing the city’s business environment’. No one can accurately say what lies behind such ambiguous phrases, as no mention can be found in reports. Ventspils City Council has plans for VNT’s payments in 2016 as well. For example, EUR 303,500 are planned to be used as con-funding for ‘realization of cultural projects and events for the development of public infrastructure in the city’.

VNT does not intend to respond to demands for such funds. Nevertheless, the company up until now has been considered as one of the largest tax payers in Ventspils and has been taking care of the city’s residents through its support projects over the years.

«Yes, we have changed our philosophy in regards to sponsoring or supporting social activities. However, in order to spend money on those things, which we fully support, that money has to be earned first. This means there has to be a stable business with confidence about the future,» – said VNT Chairman Panclaf.

«I think we will be more careful in our choices from now on. Yes, we have decided to end our contract with the city council. We are also less involved in professional sports clubs. But we do support many other sectors: seniors, hospitals, disabled athletes, orphanages, etc. I believe this aspect will not change in the future,» – promises Panclaf.

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