The amount of wood chips necessary for heat supply in Latvia in this heating season is sufficient. This was confirmed at a number of meetings of the Minister of Economics Ilze Indriksone, the Latvian Forest Industries Federation, Joint Stock Company “Latvijas valsts meži” and wood chips production companies.
In recent weeks, the Minister of Economics has met in various formats with the Latvian Association of Heat Supply Companies, the Latvian Biomass Association, the Latvian Association of Local and Regional Governments, organisations and entrepreneurs of the wood products production industry to discuss the current situation with the availability and adequacy of wood chips for the heating season.
The problem is not with the availability of wood chip resources in Latvia. Several organisations have confirmed to me that the amount of wood chips is sufficient to provide the amount needed for Latvia during this heating season. When meeting with and speaking to stakeholders, it is clear that the main problem now is that the conditions of the proposed agreements of both parties are incompatible. Namely, the rapid changes in the energy market and the experience of the previous season with rapid price increases and termination of contracts have created a situation where the buyer’s expectations for lower prices and guarantees provided by the supplier do not match the main desire of the wood chips suppliers to see the monthly price indexation in the contract,” the Minister of Economics explains the situation.
The Minister points out that wood chips suppliers and heating providers must understand the new market situation, talk and agree on appropriate cooperation conditions so that an agreement can be reached on supplies and it is possible to prepare for this heating season.
For the sustainability and stability of the sector, the industry’s ability to learn to cooperate in the long term and to conclude contracts for at least two or even three heating seasons will be crucial. In view of the crucial role and impact of energy price increases on the economy and on the level of population welfare, it is currently critical to ensure timely cooperation between all stakeholders,” Ilze Indriksone emphasises.
The Ministry of Economics (ME) is already actively cooperating with wood product manufacturing industry organisations, so that all players in the sector can better understand the market situation, as well as help to prepare guidelines for the introduction of uniform procurement conditions and indexation principles for long-term cooperation, for example, by providing for monthly price indexation in the contracts, so that the supplier can meet the conditions of the contracts throughout the season.
At the same time, ME urges the Public Utilities Commission to ensure that the price of energy sources can be revised more frequently, following market changes flexibly.