Estonian Economy

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April 2008 named projects such as the 43 million kroon (EUR 2.75 mln) labor market measures plan, the Emajõgi River catchment basin water management project worth 700 million kroons, the construction of a breakwater in the port of Tallinn for 371 million kroons, and the Kukruse road construction project budgeted at 590 million kroons. It is not fully certain at this point that Estonia will manage to implement those projects and use up the EU money. Absorption of EU support is particularly important in the present economic cooling situation where utilization of EU monies would support the economy among other things by bringing extra taxes into the state budget. Estonia has until the end of 2010 to distribute the EU support of the previous financing period. _______________________________________________________________ Further information is available: http://www.eestipank.info/pub/en/dokumendid/statistika/ _______________________________________________________________ DEVELOPMENT BY SECTORS BANKING • The Estonian competition authority is going to study the size of banks' card payments. The Competition Board is very much interested in the financial sector. It has planned an analysis of cross-bank card use for 2008. The issue was taken up by the European Commission. If it has been found in Europe that there are problems with free competition in that respect, then it is also an Estonian problem. However, it is still early to assess what the investigation could bring. The service charges could be too high, but the results of our survey will only be established at the end of the year. ENERGY • The Estonian Foreign Ministry wants to find out why a report on the environmental impact assessment for the extension of Finland's Olkiluoto nuclear power plant does not cover the issue of informing the international community about a nuclear incident or catastrophe. The Foreign Ministry also suggested that Estonia take part in the environmental impact evaluation. Remarks and proposals on the Olkiluoto environmental impact assessment report can be filed till April 20. • AS Narva Elektrijaamad (Narva Power Plants) is planning to start burning biofuel in combination with oil shale at one of its two large power plants. The new generating unit using the circulating fluidized bed technololgy at the Baltic Power Plant is suitable for burning fuel of low combustion value and that up to 10 percent of biolfuel can be burned alongside oil shale in its furnaces. Given that the electricity output capacity of the reconstructed generating unit is 215 megawatts, implementation of the plan would provide Estonia additionally with more than 20 megawatts of capacity based on renewable sources of energy. Besides, an estimated 150,000 tons less oil shale would be needed annually. Readjusting the existing furnaces that use the circulating fluidized bed technololgy so that they can burn also biofuel is the cheapest and most effective way for increasing the amount of renewable energy. It would create a stable and long-term demand on the market for wood chips and other low-value biomass. • The Baltic Sea region needs extensive investments to meet the increasing demand for energy and reduce hazardous emissions in the coming years, Johnny Akerholm, president and CEO of the Nordic Investment Bank (NIB), says. Akerholm emphasized that the Baltic Sea region faces a challenge in securing the long-term energy supply. It is important to continue integrating national energy systems while also securing adequate investments in new generation capacity. Investments are needed in order to increase the share of non-fossil energy, reduce emissions and introduce new technologies in areas such as energy efficiency, carbon capture and storage. The energy systems also have to be adapted to the consequences of climate change, such as more violent storms causing damage to networks and other infrastructure. Action must be taken and soon. Otherwise, the rising demand will lead to even more sharply increasing energy prices, which will threaten the growth of the region in the longer term. • Eesti Energia will invest 5.4 billion kroons (EUR 345 mln) during the financial year starting in April. 2.2 billion kroons of the investments will go into grids according to plans. This is more then ever before. In power grids, the priority is raising the quality of grid services and remote reading of meters. The company is planning to invest 2.2 billion kroons into the energy generation sphere. That sum does not include a possible investment into a new oil-shale fuelled power bloc or other major project, which will be separately discussed by the Eesti Energia supervisory board. Of the production investments in the plan a considerable share, 1.2 billion 4
April 2008 kroons, will go into renewable energy, with the rest going to ensure reliability of power plants and to increase their life. • The generation of wind energy totaled 26.8 gigawatt-hours in January and February this year, 81 percent percent higher than the year before. Hydroelectric power generation increased by nearly 28 percent to 5.1 gigawatt hours during the two months. In all, a total of 2,121 gigawatt-hours of electricity was generated in Estonia in January-February, 8 percent more than in the same period the year before. Electricity import fell by nearly tenfold to 27 gigawatt-hours against the previous year. In the same period export fell by about 17 percent to 286 gigawatt-hours. The fall in thermal energy output was by nearly 12 percent to 2,095 gigawatthours. • Eesti Energia has signed a contract with the Jordanian government and the state-owned National Electric Power Company on the construction of the first oil-shale fuelled power plant in Jordan. Eesti Energia will get the exclusive right to develop a project aimed at the construction of a power plant of up to 900 megawatts. During the next 3 years studies as well as the necessary preparations for making the blueprints of the construction work will be carried out under Eesti Energia's leadership. Eesti Energia's main role in the project is sale of knowhow. The capital necessary for the construction of the plant can be borrowed from major investors. The power plant to be built in Jordan would be the first considerable oil-shale fuelled power plant operating outside Estonia. Khaldoun Qutishat, the Jordanian minister for energy and mineral resources, said the Estonian Energy project was a breakthrough as launching of electric power generation on the basis of local fuels would realize the country's decades-long aspiration of reducing its independence from imported energy carriers. • Estonian PM Ansip met with Lithuanian President Adamkus and confirmed that Estonia was very much interested in going on with the Ignalina nuclear power plant project. Estonia wants to take part in the Ignalina project, because it is a sensible decision. The parties stated at the meeting that Estonia and Lituania had the same aims in the energy sphere. To achieve them the Baltic countries will have to closely cooperate because the energy issue is important for all the three countries. The parties also stated that it was important for the Baltic countries to create additional links with other EU countries. Both the countries are actively working in that direction. INDUSTRY • The Australian stock exchange-listed company Monaro Mining NL wants to explore the Ida- Virumaa region for different metals including uranium and gold. Monaro Mining NL founded a subsidiary, Balti Kaevandused ja Uuringud (Baltic Mines and Exploration) in Estonia last year. The Environment Ministry received on March 13 two applications for exploration title in its name which cover an area of around 20,000 hectares in the Vaivara, Toila and Illuka municipalities. The aim of the exploration is to assess workable quantities of mineral resources and perspectivity of concentrations. The list of metals to be searched for includes iron, molybdenum, copper, lead, zinc, uranium, vanadium, gold, silver and platinum. In the course of the exploration up to one hundred 60-500 meters deep holes are to be drilled. Permission is sought for a period of five years. IT • A GfK Custom Research Baltic poll carried out in February revealed that 69 percent of Estonians aged 15 to 74 have home computers. According to the poll, the number of Internet users is the same. The overwhelming majority of Estonians aged 15-45 own computers, and also the percentage of Internet users is the highest in that age group. In the age group 46-74 nearly half have home computers and there are as many Internet users among middle-aged and elderly people. Self-employers persons, persons holding managerial posts or working as specialists are morer often owners of home computers than others. Home computers and use of the Internet is more common also among persons with secondary or higher education. Nationality made no difference in the ownership of computers or use of the Inernet. Of pensioners one fifth own home computers, but their percentage of the Internet use is slightly lower. • The cooling of the economic environment has not had a significant impact on the sale of computers in Estonia, computer sellers say. The market of home users continued to grow in the first quarter and no major changes took place in corporate demand either. According to the ML, sales to the public sector happen at their own pace owing to the one-off nature of public procurement tenders. In regular sales, unit sales of laptop computers of ML grew 46 percent while unit sales of desktop computers of ML dropped 15 percent. That the sale of desktops is replaced by the sale of laptops is a fully normal process. The manager of the seller of Apple computers IM Arvutid said that the slowdown of economic growth had not been felt in sales and no decline had taken place in comparison with 2007. 5
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Estonian Economy

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