Regarding unbundling of Latvijas elektriskie tīkli AS

Yesterday, on 9 June, amendments were made in the Register of Enterprises regarding the reduction of the share capital of Latvenergo AS by 222,678,000 EUR, which resulted in a new share capital of Latvenergo AS amounting to 612,205,449 EUR (equity of Latvenergo AS as on 31 March 2020 was 2,034 million EUR). Today, on 10 June, shares of Latvijas elektriskie tīkli AS were transferred to the Ministry of Economics.

Thus, Latvijas elektriskie tīkli AS, the subsidiary of Latvenergo AS, has been separated from Latvenergo Group and the Latvian electricity transmission system owned by Latvijas elektriskie tīkli AS (330 kV and 110 kV power transmission lines, substations and distribution points) has been transferred to the state and then it is planned to invest it in the share capital of Augstsprieguma tīkls AS.

The unbundling of Latvijas elektriskie tīkli AS has not affected the credit rating of Latvenergo AS on the Baa2 level with stable outlook. Taking into account the planned unbundling, Moody's conducted an impact assessment and on 15 October 2019 affirmed the credit rating at its current level emphasising the positive competitive position of Latvenergo Group on the Baltic electricity market, efficient and environmentally friendly hydropower plants, the share of distribution revenues, as well as the strong financial situation.

As it was previously reported, the most common model of management of transmission network systems in European countries is the one where network assets are owned by the transmission system operator. Therefore, on 8 October 2019 the Cabinet of Ministers supported full ownership unbundling of the electricity transmission system operator until 1 July 2020.