The Door to the Baltic Sea

Mr. Gunnar Okk, President and CEO of Eesti Energia AS

Interview with

Mr. Gunnar Okk
President and CEO

April 17th, 2000

Eesti Energia is one of the biggest and most active companies in Estonia. Could you give us the historical background to Eesti Energia?

Eesti Energia is an integrated energy company and the main player today in the Estonian energy market. The company was formed in 1939 and was reformed to a joint stock company in 1998. We are based on the local energy resources. Today we generate more than 90% of the region's electricity.

Can you give some technical details about Eesti Energia?

We are the biggest company of Estonia. We employ directly about 6000 people. Together with the daughter companies and infrastructure involved activities it is up to 12.000 people. We also own 51% of the oil shale refinery.

We have 3 main power plants, the biggest power plants based on oil shale.

Today's biggest issue is the privatisation of the company. You have been in talks with American NRG Energy for a several years now. Some parts of the energy sector have already been privatised such as West-Estonian Electricity network and Kohtla-Järve. Can you give us some more details about these ongoing privatisation discussions?

Eesti Energia is still not a private company, it is a state owned company. The companies you mentioned have not been a part of Eesti Energia since 1998 when we reformed the company. The State enterprise Eesti Energia was closed down and we established a stock company. Talking about the privatisation talks with NRGEnergy our owner, the Estonian Government, is currently negotiating about the privatisation of 49% shares of Estonian Energy's daughter company Narva Power.

Why have these talks have gone on so long?

They are unique. Estonia is the only country in the world who has energy production based on the local oil shale. There have been different views and different governments.

What seems to be the biggest problem? Would you be satisfied with NRG Energy taking over this part of Eesti Energia?

The principle was good immediately when we started in 1998 by special commission of government. The principle was that 49% of our shares would be privatised by strategic investors. The privatisation process is unique and the government wants to have a lower electricity price in Europe. The price is not the main focus. Of course it is important but the main point is that we can continue with our local cheap energy resource - oil shale. Even after that when the energy market is open.

Are you still open to bids from other companies for privatisation?


Can you tell us something about your environmental policy? It is obviously one of your main issues.

The main policy is that our energy production has to fulfil all the modern European environmental regulations.

Are you exporting any of your power to other countries?

Yes, our main export partner is Latvia.
Are you also in talks for building a cable between Estonia and Finland?


What are your prospects, you are already exporting to Latvia, got arrangements with Russia, you are about to build a cable between Estonia and Finland. What are your expectations for the future growth of Eesti Energia?

Eesti Energia has to work out a clear view of how to survive after differentiation of the Eastern market. Our purpose is to keep going at this part, having a combination of efficient production and low-cost we can continue to operate on the market.

What are your other plans for the future?

We have to adapt ourselves to a new situation. It is clear that after the cooperation of markets we are going to loose a part of our customers to service providers, to different brokers. We believe that we can find other markets. We are looking very seriously for the possibility to enter telecommunications. We are the owner of the second largest telecommunication network today. We need telecommunication and especially data communication for our work.

Will you go diversify into different types of energy, ones which are more environmentally friendly and renewable ?

Sure, there is only one condition. That kind of energy production has to be more efficient than today's energy production.

Are you developing new technology, which you can then sell to other companies in different parts of the world?

I do not think that we can be pioneers for a new energy production. Everything is already done. Our utilisation of oil shale is something unique. There is plenty of oil shale in the US, Colorado, China but nobody is using the oil shale today. It can be the future energy resource.

How long have you been at the head of Eesti Energia?

Right from the start.

What has been your greatest challenge?

To reform the old soviet based company to a modern one.

What would you say has been your greatest success?

When we started this company 2 years ago we had 8000 employees, now the number is 6000. We succeeded to cut the costs more than 300 mln EEK. Today we are able to finance our investments internationally. It is fully possible to arrange international syndicates. We have a long way to go.

What repercussions will Estonia being a member of the EU have on Eesti Energia?

Then we will have the same work conditions. We have to be able to compete

What would be your final message to Forbes Global readers?

We work hard and want to continue. Everything is on the way. We are able to finance our investments. We know that market will be open very soon, we have to hurry. We have local problems here. Based on that it is very hard to form the final message.

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© World INvestment NEws, 2000.
This is the electronic edition of the special country report on Estonia published in Forbes Global Magazine.

September 18th 2000 Issue.

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