Industrialists squeezing the state

Lennart Ruuda
, reporter
Please note that the article is more than five years old and belongs to our archive. We do not update the content of the archives, so it may be necessary to consult newer sources.
Photo: Erik Prozes

Entrepreneurs planning the biggest industrial investment in Estonian history are leaving the government with little choice: the cellulose factory will either be built in the Suur-Emajõgi area, or it will not be built in Estonia at all.

The government is set to introduce a special plan that considers as the possible locations for the factory Pärnu, Viljandi, Jõgeva, Tartu, and Põlva counties. The aim of the special plan is to determine where it would be most sensible and environmentally friendly to build the plant.

The company behind the investment, Est-For, sent a letter to the government yesterday where it pointed out that Pärnu, Jõgeva, and Põlva counties should be crossed out immediately.

Head of the company Margus Kohava said that should it prove impossible to find a suitable location for the factory within ten kilometers of Suur-Emajõgi in Tartu or Viljandi county, plans to build the factory in Estonia need to be abandoned.

„The investors we represent are not prepared to construct the plant anywhere else. And should it prove impossible, either justifiably or not, to construct it in the area, it will not come to Estonia,“ Kohava said in no uncertain terms.

An unfavorable decision for Est-For would mean the billion-euro investment going abroad. „While we would not like to disclose alternative locations we've considered, I can say that one [possibility] is definitely the northern part of Latvia,“ Kohava said.

Broader special plan would drag out the process

Kohava listed several reasons why investors would be bothered by a more broad-based special plan. The first reason is that a plan that would also consider Põlva, Jõgeva, and Pärnu counties would take much longer to complete.

„Processing it all would take an insane amount of time. Whereas it would be entirely useless as we're not willing to build the factory in those areas. If the government has someone willing to construct one away from Emajõgi, let them do it; however, I have no idea who that could be,“ Kohava explained.

He said that Pärnu county would be too far away from raw material – higher transport costs would directly affect  the project's feasibility and competitiveness.

Locations in Põlva and Jõgeva counties would not be suitable as they lack necessary grid connections.

Therefore the only remaining option concerns properties close to the Suur-Emajõgi in either Tartu or Viljandi county that meet all of the future factory's needs.

„If we wanted to depend solely on Estonian raw material we could build the factory anywhere. However, the risk would be too great for our investors,“ Kohava said. The advantage of Tartu County is that it has the necessary infrastructure.

Kohava listed the following as factors speaking in favor of the Suur-Emajõgi area: a suitable plot of land covering 100 hectares, vicinity of a freshwater resource sporting a sufficient volumetric flow rate, sensible probability of securing easements needed in terms of that vicinity, vicinity of raw material, closest potential railroad connection to Latvia, and a suitable road network.

Ministry to weigh proposal

Adviser at the planning department of the Ministry of Finance Anni Konsap said that draft legislation for the special plan has been drawn up and sent out for coordination.

The government is set to discuss the plan this week or next. Konsap emphasized that the special plan will not make a decision concerning the factory's location but merely determine one will be sought in the process.

She agreed with Kohava in that it only makes sense to concentrate the plan on where investors are interested in building the plant.

The public servant said that weighing unrealistic locations would be burdensome for the public, local governments, and the developer expected to pay for it all.

„One of the goals of coordination of the government order is to exclude counties that are deemed unsuitable following objective circumstances, or to include others if necessary – that is the feedback the finance ministry wants from other ministries, local governments, and the developer,“ she said.

Est-For plans to invest around €1 billion into a cellulose factory that would process approximately 2.5-3.3 million tons of pulpwood annually. The plant's final product would be exported. The project is managed by timber industry experts Kohava and Aadu Poll.