The Ministry of Economics strengthens control measures for MPC beneficiaries


Ministry of Economics has stepped up control measures for beneficiaries of the Mandatory Procurement Component (MPC). An ambitious inspection process of all the approximately 400 power plants selling electricity produced within the framework of mandatory procurement has been launched.

By amending the regulatory enactments, from 2018, stations that have received permission to sell electricity produced under the MPC are subject to increased control.

At the initiative of the ministry, this year, regulatory enactments regulating the renewable energy sector have been supplemented with an essential provision. It provides that in cases where intentional fraud has been established, for example, significant technological violations or the use of inappropriate fuel resources, will be subject to the Ministry of Economics, without warning, to decide on the abolition of compulsory purchase rights, thus further reducing the number of beneficiaries and the resulting burden on the state the economy and by eliminating dishonest entrepreneurs from the range of recipients of the support.

In order to verify whether there are any violations in the operation of the stations, AS Enerģijas publiskais tirgotājs (JSC) has launched an ambitious inspection process of all the approximately 400 power plants selling electricity produced within the framework of mandatory procurement. Within the framework of the examination of the stations, their compliance with regulatory enactments shall be verified, as well as the compliance of the operation of co-generation power plants with the demand for useful heat energy shall be assessed. In the second half of 2018 a total of 100 stations will be examined, while in 2019 - 200 stations will be examined. A comprehensive examination of all stations is expected to be completed in the first half of 2020. In parallel, an active monitoring of stations is carried out by the control group of the Ministry of Economics.

As a result of these inspections, the Ministry of Economics has filed an application with the State Police in relation with one of the largest co-generation stations in Kurzeme, SIA Tukuma DH (LLC), which may have misused the heat energy over a longer period of time, which is a gross and obvious violation of the MPC rules.

Likewise, after information published in autumn 2017 about the non-compliance of certain co-generation power plants with the requirements of the Cabinet of Ministers, in October 2017, the Ministry of Economics commenced inspections of 40 RE co-generation power plants, which resulted in the cancellation of 26 permits allowing to prevent the possible increase in MPC total costs for the next 10 years of about EUR 384.5 million.

The licenses for the sale of electricity within the mandatory purchase issued to these merchants were largely cancelled because it was established that the production of electricity in co-generation had not been launched within the deadline provided for in the regulatory enactments.

Also, as of year, the Ministry of Economics has exacerbated control over tax debts and is conducting database of taxpayers published by the State Revenue Service on 341 merchants having contracts with AS Enerģijas publiskais tirgotājs (JSC) for purchasing electricity produced under the mandatory procurement, the Ministry established that 61 enterprises had not fully complied with their tax obligations towards the state.

These entrepreneurs were promptly sent a warning imposing an obligation on them to pay their tax debts by mid-September. Should the tax debt not be paid, the merchant would lose its rights to sell the electricity produced within the framework of mandatory procurement. The next examination of the existence of tax debts will be carried out as early as November this year. Similarly, the Ministry of Economics issued warnings this year to 40 merchants for failure to submit the annual reports.  

Last update:    01-02-2019