Liepaja, 2013-04-02 15:23 CEST (GLOBE NEWSWIRE) -- JSC Liepājas metalurgs is disappointed with the meeting of the cabinet of Ministers, held on 26 March, in which no decisions were taken in respect of the support to JSC Liepājas metalurgs in the extremely hard situation, that has hit the metallurgical industry across the whole Europe. On 13 December 2012 the European Parliament in agreement, that the situation is dramatic in metallurgy, entrusted the European Commission with a task to elaborate an industry support program by June 2013. In this context JSC Liepājas metalurgs did not expect such attitude of government towards problems of the company.
On help from government
It should be emphasized, that JSC Liepājas metalurgs from the government does not require any investments, but the ACTIONS, coordinated with the plan of the company for finding a way out of the crisis. The plan specifies activities amounting to 63 Mio. LVL, already implemented or to be implemented by the company itself. They include procurement of capital from new shareholders, long-term credit, achievement of agreement with other creditors, introduction of strict regime of economy, reduction of administrative costs, increase of production efficiency and reduction of social program. Within the last days shareholders of the company Sergejs Zaharjins and Ilja Segals have been in Istanbul, London and Milan to talk about attraction of investors to JSC Liepājas metalurgs.
On crisis management plan presented to Ministers
On 18 March 2013 the major shareholder of JSC Liepājas metalurgs Sergejs Zaharjins transferred to the Minister of Finances Andris Vilks and to the Minister of Economy Daniels Pavļuts ‘Plan of actions for Crisis Management’. No comments or questions on this plan were received by 26 March, therefore it is incorrect to state , that ‘the shareholders do not have a business-plan’.
On turnaround on previous position of government
The government gave a statement: should the audit, conducted by Ernst & Young Baltic reveal, that no illegal actions were performed by the company, it would provide its support. The audit shows, that no illegal actions have been established at JSC Liepājas metalurgs, though the government keeps on refraining from the support.
On Obligatory Purchase Component (OPC)
In the current market situation excess burden is caused also by the disproportionally increasing OPC payment (within the last five years Liepājas metalurgs has paid around 11 Mio. LVL in OPC payments and this year the proportion of OPC in the invoices for electricity is approximately 10 Mio. LVL). Obligatory Purchase Component is governmental responsibility. In the situation, when a Latvian manufacturer having export amount of 98% has problems, the government cannot turn its back and watch the company sinking.
On company’s contribution to country and community
When things were all rights in the metallurgical industry in the EC and at the company – when the annual tax payments achieved 10 Mio. LVL, when at a length of ten years the production was modernised at the own expense and in 2011 built the most up-to-date steel melting facilities in Europe, when there were taken over and put right the stadia and Ice-Hockey Hall in Liepaja, when the youth sport was supported for 600 children of Liepaja and provided for at least 15 000 working places in all companies of the holding as well as a wide social program for the employees, JSC Liepājas metalurgs was paid appropriate attention from the government. Today, when the company is affected by the industrial crisis in metallurgy in the EC, we do not lose our hopes regarding right choice of the government, changing its position and supporting JSC Liepājas metalurgs.
Līga Šenfelde
Assistant of chief Economist
63455926, shenfelde@metalurgs.lv