The Investment and Development Agency of Latvia (LIAA), the Latvian Chamber of Commerce and Industry (LCCI), the Employers’ Confederation of Latvia (LDDK) and the Foreign Investors’ Council in Latvia (FICIL) are calling for practical lessons to be drawn from the K2 Ventum case to ensure that the development of major investment projects in Latvia becomes clearer and more predictable in the future.
On 25 August, the Cabinet of Ministers decided not to approve the wind farm project proposed by SIA K2 Ventum. The total value of the project is €560 million, including at least €420 million in planned foreign direct investment. The project envisaged capital investment originating from Latvia, Lithuania and Switzerland.
Investors Assess the Entire Path to a Decision
Investors currently considering major capital investments in Latvia regard a transparent and predictable process as being just as important as the final decision itself – whether the rules are clear, deadlines are respected and institutions act in a coordinated manner.
The preparation of major investment projects takes several years. Even before a final decision is made, an investor commits resources to technical documentation, research, obtaining permits and securing financing.
“Priority project status does not guarantee a positive final decision, but an investor has the right to expect a clear, timely and legally robust process. Every such case also sends a signal to future investors – whether the rules in Latvia are predictable and whether state institutions are capable of acting in a coordinated manner. The credibility of our business environment and our ability to compete for future investment depend on this,” emphasises Ieva Jāgere, Director of LIAA.
The predictability of decision-making is also assessed by international banks and other project financiers. Cases like this can affect the risk assessment of both the specific project and the country’s overall investment environment, increase financing costs and reduce Latvia’s ability to attract future investment projects.
The importance of process quality for companies’ long-term decisions is also emphasised by LCCI, whose members include both domestic and foreign companies.
“Businesses understand that not every project will receive a positive final decision. However, a company that invests for several years in research, documentation and arranging financing must be able to rely on clear conditions and defined decision-making deadlines. If significant issues remain unresolved until the end of the process, the company loses not only the funds and time it has invested – this also affects its willingness to invest in Latvia in the future. A predictable process is not a special privilege for an investor; it is the foundation of a competitive business environment,” says Katrīna Zariņa, Chair of the Board of the Latvian Chamber of Commerce and Industry.
Legal Certainty Is a Prerequisite for Investment
Legal certainty and legitimate expectations are among the criteria international investors and their financiers consider when assessing a country before committing capital. If state institutions grant priority project status and repeatedly approve a project’s progress, but the final decision is not made within the prescribed timeframe or procedure, this creates a precedent that investors and their legal advisers will factor into the risk assessments of future projects.
In this case, the statutory 30-day deadline for adopting a decision was not observed – the decision was made several months later.
“FICIL is seriously concerned about the decision-making process of the Cabinet of Ministers in the K2 Ventum case. We are not taking a position here on whether the specific project should be implemented or on its environmental impact – our concern is about the quality, timing and predictability of the decision-making process. This is not simply a political decision – it is an administrative act that directly affects the rights and obligations of a specific investor.
“It is therefore particularly important to respect the principles of good governance, legitimate expectations, procedural fairness and legal certainty. It is unacceptable for a decision to be delayed by nine months, causing significant costs and losses to the investor, while the draft decision itself is substantially amended shortly before it is considered.
“Such an approach raises questions about the ability of public administration to ensure a predictable and high-quality process for major investment projects. There is no doubt that the law requires the public interest to be respected, but safeguarding the public interest is not merely a question concerning a specific project – it is also a question of having a high-quality regulatory framework that allows all parties involved to achieve a predictable outcome,” says Jānis Zuļķis, Head of FICIL’s Energy and Industrialisation Working Group.
Impact on Competitiveness and Energy Independence
Latvia’s ability to attract major infrastructure and energy projects is directly linked to its position in regional competition.
The share of wind energy in Latvia’s electricity generation is currently significantly lower than in Lithuania and Estonia, where it is several times higher. In 2024, Latvia generated 276 gigawatt-hours of electricity from wind power, compared with 1,164 gigawatt-hours in Estonia. In Lithuania, wind energy has become one of the main sources of domestically generated electricity.
When choosing between the Baltic states, investors compare not only market potential but also the speed and predictability of administrative and legal procedures in each country. Greater domestic generation capacity could reduce Latvia’s dependence on electricity imports and strengthen the country’s competitiveness in the Baltic region.
The impact on long-term planning and employment is also highlighted by the Employers’ Confederation of Latvia (LDDK).
“Investors who have spent years preparing projects and relying on the process established by the state must not be treated according to the prevailing political climate. This is not merely a decision about a single project, but a signal about the predictability of Latvia’s business environment. If the state creates the impression that the rules of the game can change for political reasons, it becomes a warning to every investor.
“Trust can be lost in a single day, but rebuilding it takes years. The cost of such decisions often extends far beyond a single project. Political responsibility means recognising the long-term consequences of these choices – whether Latvia will continue to be able to attract investment, create well-paid jobs and ensure sustainable economic growth,” emphasises Kaspars Gorkšs, Director General of LDDK.
Practical Improvements Are Needed
LIAA, LCCI, LDDK and FICIL believe that predictable decision-making and adherence to deadlines are prerequisites for Latvia’s competitiveness in attracting investment.
Responsibility for project progress and compliance with deadlines must be clearly defined, while disputed legal issues should be addressed at an early stage. This would allow problems to be identified sooner and provide investors with a clearer path from the submission of a project to the final decision.
The responsible state institutions, together with LCCI, LDDK, FICIL and other stakeholders, should continue seeking solutions to improve the investment environment, accelerate the development of major projects and strengthen Latvia’s position as a reliable investment destination.
