OREANDA-NEWS. March 29, 2010. AS Tallinna Vesi has always been fully compliant with the Services Agreement and with applicable laws and regulations. It is not for the Company to comment on whether or not the City of Tallinn has complied with due legal process in approving our tariffs. However we would like to make the following points:

The Services Agreement explicitly states that the tariff mechanism is in accordance with the Public Water and Wastewater Act.

The Legal Chancellor has stated publicly that in his view AS Tallinna Vesi's tariffs are twice the level they should be, which can be proved to be absolutely incorrect and also clearly outside the remit of the Legal Chancellor.

Unfortunately, in his conclusions, the Legal Chancellor has relied on the incomplete analysis conducted by the Competition Authority as fact. Incomplete analysis should not be used to draw firm conclusions, as pointed out by AS Tallinna Vesi to the Competition Authority and to the Legal Chancellor on numerous occasions.

In 2005 Estonian and international investors purchased shares in AS Tallinna Vesi at 9,25 EUR during the initial public offering on the basis of the terms and conditions of the services agreement.

AS Tallinna Vesi has analyzed its rate of return and where regulated business is concerned, we believe we are in accordance with international best practices for comparable enterprises around the world. Basing our calculations on the methodology applied by British water regulator OFWAT, often cited by the Competition Authority and the Legal Chancellor, the company's return on invested capital since the privatization in 2001 has averaged 9%.

We are disappointed that the Legal Chancellor has decided to conduct a trial by media and declare a publicly listed company guilty, until proven innocent. AS Tallinna Vesi has sought meetings with all relevant authorities to openly discuss best practice economic regulation, but there has been minimal reciprocation so far. Any attempt to re-assess Estonia's economic history, especially reviewing decisions made in 2001 in the context of 2010, will have a detrimental effect on the country's reputation as an investment destination.