Boston, MA -- (SBWIRE) -- 01/11/2013 -- BMI View: While Estonia's Infrastructure sector is on a much slower growth path in the wake of Eurozone retrenchment there are nonetheless strong fundamentals for the sector. The construction industry value is expected to reach US$1.2bn for 2012 based on a year-on-year (y-o-y) growth rate of 0.67%. This growth will continue over the forecast period with industry value nearly doubling to US$2.2bn by 2021.

Key developments in 2012 included:

* Legislation passed on June 6, 2012 requiring the country's main natural gas company to unbundle transportation infrastructure, further affirms our view that tensions between the Baltic states and Russia will remain a key theme of this decade. While we do not expect this issue to exacerbate tensions between Estonia and Russia, we continue to expect relations between the two nations to remain strained over our forecast period. * The European Investment Bank (EIB) announced that it had agreed loans worth EUR95mn (US$124mn) with Estonian energy company Eesti Energy. These were to be used to finance the construction of a new power plant and two wind parks. A EUR50mn (US$65mn) loan will finance the construction of a plant at Iru, which will convert waste material into energy; the plant is located at the site of a former power plant, which will reduce construction costs. The energy produced will reduce Estonia's dependency upon imported gas, as well as its use of landfill sites. The EIB has also agreed a EUR45mn (US$59mn) loan to finance the creation of two new wind parks at Narva and Paldiski, which will produce 39MW and 22MW of power respectively, and help Estonia to meet its EU requirements on renewable energy production by the 2020 deadline. * Nordic Investment Bank announced that it will provide a EUR15mn (US$19.83mn) loan to Estonian power transmission operator Elering. The loan will enable Elering to construct a new 330kV transmission line between Tartu, Viljandi and Sindi, thereby connecting the south-east and south-west regions of the country. The line will improve the supply of electricity and allow the connection of proposed new wind parks to the grid. Construction of the line is scheduled for completion by 2014. * Estonia's government invested a 22% stake in the construction of a nuclear power plant in neighbouring Lithuania in partnership with Hitachi-GE Nuclear Energy. The plant is expected to be equipped with a 1,350MW advanced boiling water reactor and requires an estimated investment of EUR6.8bn (US$8.84bn). The project will be funded through the borrowing of nearly EUR4bn (US$5.2bn), while the remaining amount will be provided by Hitachi. The plant is scheduled to become operational between 2020 and 2022.

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