Conexus has lodged an application with the Court challenging the Regulator's decision to refuse to extend the deadline for compliance with the certification conditions
The unified natural gas transmission and storage system operator JSC “Conexus Baltic Grid” (Conexus) has submitted a claim statement at the Administrative Regional Court challenging the decisions of the Public Utilities Commission (Regulator), by which the Regulator refused to extend the deadline for compliance with the certification conditions and warned about the concompliance with the conditions within the prescribed deadline. Conexus regards that it has done its utmost to meet timely the conditions of the certification decision, while the Regulator has failed to take into account the circumstances that cannot be directly affected by Conexus to complete fully the certification.
Conexus addressed timely the Regulator with the request to extend the deadline for compliance with the certification conditions - on 12 December 2019. This occurred when both of its current shareholders Marguerite Gas I S.a.r.l (Marguerite) and PAS 'Gazprom' (Gazprom) had started the process of disposing of their shares, but it was clear that it needed more considering the parties involved in the process and the objective circumstances that Conexus had given to the Regulator in its request for extension. Conexus then asked the Regulator to extend the conditions set out in the certification decision until at least 1 July 2020, providing for the time for the adoption of the relevant decisions of the Cabinet in accordance with the Energy Law, which provides the State with pre-emptive right. However, the Regulator hesitated in its decision and, as a result, adopted a decision in this April to refuse the extension and to issue a warning to Conexus.
Zane Kotāne, Chairperson of the Board of Conexus: "For our part, we have done everything possible to meet the certification requirements, despite the fact that the legal proceedings on the substantive legality of these conditions is still ongoing. We have therefore applied to the Court to assess the validity of the decision taken by the Regulator and to decide on cancellation of the warning applied and the extension of the deadline for compliance with certification conditions. It should be outlined that the compliance with the certification deadline depends not only on Conexus and its shareholders, but also on national decisions. The Cabinet shall decide on the use of the pre-emptive right of the State to the shares of Conexus to be sold and, in case this pre-emption right is not exercised, on the acceptance of the transaction, taking into account the considerations of national security. If this decision-making process takes longer due to different external factors, it is appropriate to decide on the extension of the deadline set."
The decision-making process of the respective Cabinet decisions has been proven to have continued for more than three months, as Marguerite notified the Cabinet of Ministers about the conclusion of the share alienation agreement on 4 December 2019, while the Cabinet of Ministers adopted the final decision on the transaction only on 10 March 2020.
Gazprom already on 29 November 2019 announced and started the acceptance of applications due to alienation of its shares in Conexus in an open tender, which ended on 30 December 2019, and the alienation of its shares is continuing.
The Regulator had certified Conexus as the unified natural gas transmission and storage system operator under the conditions that from 1 January such possibility must be eliminated that persons controlling the energy supply operator can influence directly or indirectly the company's activities, and this does not create any conflict of interest between Conexus and the energy supply operator, which is active in the production or trade of natural gas or electricity.