On  June  25,  2003  JSC  "Latvijas  Gāze"  has  received the Stockholm

Arbitration  Court  verdict concerning the company claim to the Latvian

state.  "Latvijas  Gāze"  addressed  the  Court  on September 18, 2001:

"Latvijas  Gāze"  and  its  shareholders  were  not  able  to  reach an

agreement  with  the  Latvian  state  about  the execution of the Share

Purchase Agreement (signed by Latvian Privatisation Agency on behalf of

the  Latvian state, JSC "Latvijas Gāze", "Ruhrgas/PreussenElektra AG" -

now  "Ruhrgas  AG",  and  "E.On  Energie  AG")  provisions. The verdict

stipulates  that  the Latvian state shall pay over LVL 7 million to JSC

"Latvijas  Gāze":  the  Latvian state has failed to comply with the gas

price  regulation  provisions  as  per  Share Purchase Agreement. While

regulating  the  prices  for  Latvian  consumers, the Latvian State was

supposed  to  take  into  consideration  the changes in gas procurement

price - according to international practice. The failure to comply with

these provisions of the Agreement has resulted with losses to "Latvijas

Gāze".  The  company claimed for a compensation of over LVL 10 million,

incurred  due  to regulation of gas prices to industrial and commercial

consumers.  The  Arbitration Court verdict came into effect on June 19,

2003,  and, according to the provisions of Share Purchase Agreement, it

is  final  and  may  not  be appealed. The verdict provides for a delay

penalty to the tune as stipulated in the Latvian legislation.