TALLINN — The Estonian government’s proposed anti-monopoly law is already biting into Tallinna Vesi even before it passes, causing its stock to decline 13 percent this week.

The draft act, which was initiated by the Union of Pro Patria, Reform Party, and Estonian Greens on Oct. 15, 2009 passed its first reading in the Estonian parliament Tuesday. The purpose of the act is to reform the District Heating Act, Public Water Supply and Sewerage Act, Competition Act, and Penal Act, so the interests of [private_supervisor]the consumers were more protected on utility prices.

If passed, the law would give full pricing control over heating companies and water companies to the Competition Authority, regardless of ownership. Heating prices are estimated to fall by 10 percent, and the monthly water utility from the Tallinna Vesi should fall by 24 percent, according to initial estimates.

The draft’s initiators said they are worried that high service prices are holding back the competitiveness of Estonian companies and slackening the recovery of macroeconomic environment as it leaves less money for consumer spending.

Parliamentarian Ken-Martti Vaher, a member of Union of Pro Patria and Res Publica said at the first reading in the Riigikogu Tuesday that the state has to set more commitments to the monopolistic utility companies.

“A situation where the gas price on the world market is decreasing but the heating prices of Estonian consumers are constantly increasing is unacceptable,” said Vaher.

AS Tallinna Vesi, which coordinates its prices with Tallinn municipal government, earned a 41 percent profit over turnover in 2008, and the invested asset productivity ratio is 20 percent.

“The invested asset productivity ratio in Tallinna Vesi exceeds the 7 to 8 percent set by European Union by several times, which means that the prices for Tallinn’s consumers are too expensive,” said Vaher.

Lauri Läänemets, Tallinn chairman of the centrist People’s Union of Estonia Party told Baltic Reports that the draft act is too Tallinn-centered, but it will affect also the water and energy companies in rural areas, where the prices might increase.

Kalev Kallo, Center Party member raised the same question at the reading.

“We heard many examples about Tallinna Vesi, which means that the draft is planned as Tallinn- centered,” said Kallo, “As the draft is missing all sorts of analysis on this issue, then it is hard for me to take a side here.”

Tallinna Vesi‘s stock fell

The stock of Tallinna Vesi fell by 13.4 percent in March 9, on the same day when the draft act was on discussion in the Parliament, and continued to fall the next day. The share price fell from 180.72 krooni (€11.50) to 156.47 krooni (€10) in just three days.

Kristo Oidemaa, an analyst at LHV Investment Bank said that the investors did not take the anti-monopoly draft so seriously until recently and considered it mere political propaganda, but are now worried about the decline in profitability its passage would cause.

“For now the first fall is over and the investors are waiting for further news and the company’s commentary,” Oidemaa told Baltic Reports. “If  that formula will be activated, then the stock price of Tallinna Vesi will suffer in the future as well.”

While there are already initial estimates about price changes, the current draft does not explicitly state on what terms the Competition Authority will determine the price, so determining an exact figure is still impossible. Oidemaa said he is advising investors to avoid buying Tallinna Vesi shares until the new regulations are laid out.

Tallinna Vesi is not commenting how the new draft will affect the company, nor the decline of the company’s share value.

“The draft act is still on reading and we can’t comment something that is still incomplete,” Priit Koff, a press spokesman of Tallinna Vesi told Baltic Reports. [/private_supervisor] [private_subscription 1 month]the consumers were more protected on utility prices.

If passed, the law would give full pricing control over heating companies and water companies to the Competition Authority, regardless of ownership. Heating prices are estimated to fall by 10 percent, and the monthly water utility from the Tallinna Vesi should fall by 24 percent, according to initial estimates.

The draft’s initiators said they are worried that high service prices are holding back the competitiveness of Estonian companies and slackening the recovery of macroeconomic environment as it leaves less money for consumer spending.

Parliamentarian Ken-Martti Vaher, a member of Union of Pro Patria and Res Publica said at the first reading in the Riigikogu Tuesday that the state has to set more commitments to the monopolistic utility companies.

“A situation where the gas price on the world market is decreasing but the heating prices of Estonian consumers are constantly increasing is unacceptable,” said Vaher.

AS Tallinna Vesi, which coordinates its prices with Tallinn municipal government, earned a 41 percent profit over turnover in 2008, and the invested asset productivity ratio is 20 percent.

“The invested asset productivity ratio in Tallinna Vesi exceeds the 7 to 8 percent set by European Union by several times, which means that the prices for Tallinn’s consumers are too expensive,” said Vaher.

Lauri Läänemets, Tallinn chairman of the centrist People’s Union of Estonia Party told Baltic Reports that the draft act is too Tallinn-centered, but it will affect also the water and energy companies in rural areas, where the prices might increase.

Kalev Kallo, Center Party member raised the same question at the reading.

“We heard many examples about Tallinna Vesi, which means that the draft is planned as Tallinn- centered,” said Kallo, “As the draft is missing all sorts of analysis on this issue, then it is hard for me to take a side here.”

Tallinna Vesi‘s stock fell

The stock of Tallinna Vesi fell by 13.4 percent in March 9, on the same day when the draft act was on discussion in the Parliament, and continued to fall the next day. The share price fell from 180.72 krooni (€11.50) to 156.47 krooni (€10) in just three days.

Kristo Oidemaa, an analyst at LHV Investment Bank said that the investors did not take the anti-monopoly draft so seriously until recently and considered it mere political propaganda, but are now worried about the decline in profitability its passage would cause.

“For now the first fall is over and the investors are waiting for further news and the company’s commentary,” Oidemaa told Baltic Reports. “If that formula will be activated, then the stock price of Tallinna Vesi will suffer in the future as well.”

While there are already initial estimates about price changes, the current draft does not explicitly state on what terms the Competition Authority will determine the price, so determining an exact figure is still impossible. Oidemaa said he is advising investors to avoid buying Tallinna Vesi shares until the new regulations are laid out.

Tallinna Vesi is not commenting how the new draft will affect the company, nor the decline of the company’s share value.

“The draft act is still on reading and we can’t comment something that is still incomplete,” Priit Koff, a press spokesman of Tallinna Vesi told Baltic Reports. [/private_subscription 1 month] [private_subscription 4 months]the consumers were more protected on utility prices.

If passed, the law would give full pricing control over heating companies and water companies to the Competition Authority, regardless of ownership. Heating prices are estimated to fall by 10 percent, and the monthly water utility from the Tallinna Vesi should fall by 24 percent, according to initial estimates.

The draft’s initiators said they are worried that high service prices are holding back the competitiveness of Estonian companies and slackening the recovery of macroeconomic environment as it leaves less money for consumer spending.

Parliamentarian Ken-Martti Vaher, a member of Union of Pro Patria and Res Publica said at the first reading in the Riigikogu Tuesday that the state has to set more commitments to the monopolistic utility companies.

“A situation where the gas price on the world market is decreasing but the heating prices of Estonian consumers are constantly increasing is unacceptable,” said Vaher.

AS Tallinna Vesi, which coordinates its prices with Tallinn municipal government, earned a 41 percent profit over turnover in 2008, and the invested asset productivity ratio is 20 percent.

“The invested asset productivity ratio in Tallinna Vesi exceeds the 7 to 8 percent set by European Union by several times, which means that the prices for Tallinn’s consumers are too expensive,” said Vaher.

Lauri Läänemets, Tallinn chairman of the centrist People’s Union of Estonia Party told Baltic Reports that the draft act is too Tallinn-centered, but it will affect also the water and energy companies in rural areas, where the prices might increase.

Kalev Kallo, Center Party member raised the same question at the reading.

“We heard many examples about Tallinna Vesi, which means that the draft is planned as Tallinn- centered,” said Kallo, “As the draft is missing all sorts of analysis on this issue, then it is hard for me to take a side here.”

Tallinna Vesi‘s stock fell

The stock of Tallinna Vesi fell by 13.4 percent in March 9, on the same day when the draft act was on discussion in the Parliament, and continued to fall the next day. The share price fell from 180.72 krooni (€11.50) to 156.47 krooni (€10) in just three days.

Kristo Oidemaa, an analyst at LHV Investment Bank said that the investors did not take the anti-monopoly draft so seriously until recently and considered it mere political propaganda, but are now worried about the decline in profitability its passage would cause.

“For now the first fall is over and the investors are waiting for further news and the company’s commentary,” Oidemaa told Baltic Reports. “If that formula will be activated, then the stock price of Tallinna Vesi will suffer in the future as well.”

While there are already initial estimates about price changes, the current draft does not explicitly state on what terms the Competition Authority will determine the price, so determining an exact figure is still impossible. Oidemaa said he is advising investors to avoid buying Tallinna Vesi shares until the new regulations are laid out.

Tallinna Vesi is not commenting how the new draft will affect the company, nor the decline of the company’s share value.

“The draft act is still on reading and we can’t comment something that is still incomplete,” Priit Koff, a press spokesman of Tallinna Vesi told Baltic Reports. [/private_subscription 4 months] [private_subscription 1 year]the consumers were more protected on utility prices.

If passed, the law would give full pricing control over heating companies and water companies to the Competition Authority, regardless of ownership. Heating prices are estimated to fall by 10 percent, and the monthly water utility from the Tallinna Vesi should fall by 24 percent, according to initial estimates.

The draft’s initiators said they are worried that high service prices are holding back the competitiveness of Estonian companies and slackening the recovery of macroeconomic environment as it leaves less money for consumer spending.

Parliamentarian Ken-Martti Vaher, a member of Union of Pro Patria and Res Publica said at the first reading in the Riigikogu Tuesday that the state has to set more commitments to the monopolistic utility companies.

“A situation where the gas price on the world market is decreasing but the heating prices of Estonian consumers are constantly increasing is unacceptable,” said Vaher.

AS Tallinna Vesi, which coordinates its prices with Tallinn municipal government, earned a 41 percent profit over turnover in 2008, and the invested asset productivity ratio is 20 percent.

“The invested asset productivity ratio in Tallinna Vesi exceeds the 7 to 8 percent set by European Union by several times, which means that the prices for Tallinn’s consumers are too expensive,” said Vaher.

Lauri Läänemets, Tallinn chairman of the centrist People’s Union of Estonia Party told Baltic Reports that the draft act is too Tallinn-centered, but it will affect also the water and energy companies in rural areas, where the prices might increase.

Kalev Kallo, Center Party member raised the same question at the reading.

“We heard many examples about Tallinna Vesi, which means that the draft is planned as Tallinn- centered,” said Kallo, “As the draft is missing all sorts of analysis on this issue, then it is hard for me to take a side here.”

Tallinna Vesi‘s stock fell

The stock of Tallinna Vesi fell by 13.4 percent in March 9, on the same day when the draft act was on discussion in the Parliament, and continued to fall the next day. The share price fell from 180.72 krooni (€11.50) to 156.47 krooni (€10) in just three days.

Kristo Oidemaa, an analyst at LHV Investment Bank said that the investors did not take the anti-monopoly draft so seriously until recently and considered it mere political propaganda, but are now worried about the decline in profitability its passage would cause.

“For now the first fall is over and the investors are waiting for further news and the company’s commentary,” Oidemaa told Baltic Reports. “If that formula will be activated, then the stock price of Tallinna Vesi will suffer in the future as well.”

While there are already initial estimates about price changes, the current draft does not explicitly state on what terms the Competition Authority will determine the price, so determining an exact figure is still impossible. Oidemaa said he is advising investors to avoid buying Tallinna Vesi shares until the new regulations are laid out.

Tallinna Vesi is not commenting how the new draft will affect the company, nor the decline of the company’s share value.

“The draft act is still on reading and we can’t comment something that is still incomplete,” Priit Koff, a press spokesman of Tallinna Vesi told Baltic Reports. [/private_subscription 1 year]

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