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State could support "Liepajas metalurgs"

Girts Rungainis. Photo: LETA.
 RIGA, March 26 - The state has already provided guarantees for the liabilities of the financially-troubled joint-stock metallurgical company "Liepajas metalurgs", and audit at the company has not established any fraudulent activities by the company's management, therefore the state could help solve the company's problems and support "Liepajas metalurgs", investment banker Girts Rungainis said in an interview on Latvian Television's morning news program ''Labrit Latvija!'' (Good Morning Latvia) today.

Rungainis pointed out that the state does not have to take over "Liepajas metalurgs" and acquire 100 percent of its shares. Nevertheless, the state, the local govenrment or another company could become a "Liepajas metalurgs" co-owner.

"Diena" reports that talks are underway with the state-owned joint-stock power utility "Latvenergo" on support measures for "Liepajas metalurgs".

Rungainis admitted that "Latvenergo" is closely involved in "Liepajas metalurgs" problems because "Latvenergo" invested money so "Liepajas metalurgs" could switch from gas to electricity, making "Liepajas metalurgs" a large consumer of electricity.

The banker explained that "Liepajas metalurgs" insolvency would be the easiest solution, however, it would cause losses to the state and the country's economy.

There is overproduction in the European metallurgical industry, however, the first companies to be shut down, according to Rungainis, should be those processing ore not scrap metal. In terms of technologies, "Liepajas metalurgs" is among the most modern metallurgical companies in Europe and possibly worldwide. Halting the company's operations would affect Latvia's export and import balance, labor market and overall development, added Rungainis.
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