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Estonian Competition Authority

Press release: The Competition Authority recommends to change principles of allocation of oil shale resources

The Competition Authority has analyzed the procedure of allocation of oil shale resources and possible future developments with this regard. According to the current procedure, preference is given to the companies already active on the market and any newcomers have no access to oil shale resources. The Competition Authority finds that with efficient allocation of resources the country could be earning significantly more.

Today the total amount of oil shale that is allowed to be extracted during a year is distributed between four mining companies, and the largest part of the extraction permits belongs to Eesti Energia group. Current Earth Deposits Act gives a clear preference to the companies that already possess mining permits. The Competition Authority finds that currently valid preferences should be abandoned and the new permits shall be issued in the future on the basis of a transparent auction procedure. “It is impossible to change the situation in the near future, since an option to issue new permits will present itself in 2020, at the earliest. Now, however, is the right time to start addressing this issue”, says Märt Ots, the Director General of the Competition Authority, while commenting on the results of the analysis.

The current state development plan for use of oil shale sets the general direction for preferences to be given to electricity generated from oil shale, although today's high oil prices make production of shale oil more profitable. Thus, competitiveness of the electricity generation in the future will be decreased. In order to ensure competitiveness of the oil shale energy sector, clear legislative policies should be adopted and oil shale resources should be allocated accordingly.