Estonian competition watchdog advises to sell oil shale mining permits at auction

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Photo: Tairo Lutter / Virumaa Teataja

The Estonian Competition Authority finds in a fresh analysis that the advantages currently enjoyed by four existing oil shale mining companies should be eliminated and new extraction permits ought to be issued at a transparent auction.

The competition watchdog made an analysis of the organization of resource allocation and possible future developments. Under the present scheme the undertakings already operating on the market have advantages and newcomers have no access to the oil shale resource. A more efficient distribution of the resource would enable the state to earn significantly more, the authority said.

Currently the whole amount of oil shale allowed to be extracted annually is divided between four undertakings, with the state-owned energy group Eesti Energia holding the overwhelming part of extraction permits. The present Earth's Crust Act gives an advantage to businesses with extraction permits in allocating new resources.

"It will not be possible to rectify the situation in the near future because the first considerable opportunity to issue new extraction permits will arise in 2020 at the earliest, but now is the time to address the issue," director general of the Competition Authority Mart Ots said in a comment on the findings of the study.

The national development plan for the use of oil shale gives overall priority to electricity produced from oil shale, but given the present high oil prices the production of shale oil will become more and more profitable and the competitiveness of electricity production will decline, the competition watchdog estimates. In order to ensure the competitiveness of oil shale energy clear legal principles ought to be formulated and a corresponding amount of oil shale resource set apart, it says.

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