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From: "LRVK" <[email protected]> Sent: 12/23/2025 11:26:57 AM To: "RMK" <[email protected]> Cc: "Jānis Salenieks" <[email protected]> Subject: Management of state forest properties

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Dear colleagues! The State Audit Office of the Republic of Latvia is currently conducting an audit in the forestry sector, examining how supervision of the state joint-stock company “Latvijas valsts meži”, which manages and operates Latvia’s state forest properties, is ensured. According to publicly available information State Forest Management Centre (Riigimetsa Majandamise Keskus (RMK)) manages Estonia’s state-owned forests and other state natural areas. In order to gain a broader picture of the situation in other Baltic States, we would like to ask you to provide information on issues related to the sale of wood products and payments for the use of state capital (dividends) by the company that manages Estonia’s state forests. Please see the questions in the attachment. We would highly appreciate if it would be possible to provide this information by 29 January 2026. If there is any need for additional information or clarification, please do not hesitate to contact Mr. Jānis Salenieks, Senior state auditor of the Environmental sector, Fifth Audit Department of SAI Latvia (email: [email protected] or telephone number: +371-23282380). Thank you very much for your cooperation! Wishing you a joyful holiday season and a successful New Year!

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1

Thank you for your letter. We have reviewed the questions you raised and provide our responses in

the order in which they were presented.

1.1. According to what principles/criteria is the price of spruce and pine sawlogs determined in long-

term contracts (for example, as a result of auctions, evaluation of the price offered by buyers, average

market price, etc.)?

The price of spruce and pine sawlogs in long-term contracts has been determined in accordance with

the following principles:

Prior to the establishment of starting prices, prospective long-term contract partners were invited to

submit their price offers and purchase intentions. These purchase intentions and proposed prices were

entered into the sales decision application, on the basis of which successful bids were identified.

Using the results of this assessment, a price corridor was formed, and negotiations with the selected

partners were initiated within that corridor.

From the third quarter of 2022, the starting prices for sawlogs have been set based on the average

market price. As of that time, negotiations on volumes and prices have no longer taken place.

In addition, the procedure for the sale of the right to cut standing forest and forest materials from state

forests has been established1. This procedure sets out the principles and requirements for determining

prices. The document is currently available in Estonian only; however, it can be translated and

provided if necessary.

The principles governing the determination of the starting price are laid down in the RMK long-term

contract guidelines2.

1.2. Do we understand correctly that the contract price is reviewed annually through negotiations?

If so, please indicate the basic principles on the basis of which the said price is updated, including

for the period from 2022 to 2024.

The contract price is not reviewed annually through negotiations. In addition, within the framework

of long-term contracts, RMK conducts quarterly auctions in which only long-term contract customers

are entitled to participate. RMK sets the starting price for these auctions, and customers submit their

bids based on their individual needs and demand. RMK does not sell timber below the established

starting price.

1 Riigimetsas kasvava metsa raieõiguse ja metsamaterjali müügi kord–Riigi Teataja 2 https://rmk.ee/en/sale-of-timber/sales-principles/

SAI Latvia

[email protected]

Meie (digitaalallkirja kuupäev) nr

3-2.1/2026

Dear Jānis Salenieks

2

RMK establishes the starting price for sawlogs unilaterally, in accordance with the applicable pricing

principles. For sawlogs, the year is divided into three delivery periods, and a starting price is set

separately for each delivery period.

The first delivery period covers the first half of the year. This is due to the nesting period, which

begins on 15 April, and the fact that by that time the logs have already been harvested on a client-

specific basis. Accordingly, the starting prices for this period are determined in advance and are not

subject to negotiations.

Please provide information on the average prices of spruce and pine sawlogs applied in the State

Forest Management Centre's long-term contracts for 2021–2024, broken down by quarter, for the

following product/assortment groups:

2.1. spruce sawlogs (18–28 cm in diameter);

2.2. pine sawlogs (18–28 cm in diameter);

2.3. if spruce and pine sawlogs in the above-mentioned diameter are not offered, please provide

information on the prices of spruce and pine sawlogs in the product/assortment groups offered by the

State Forest Management Centre, e.g. 18+cm, etc.

Below is an overview of the prices of sold spruce and pine sawlogs (based on actual sales) in the

18+ cm diameter group.

Produ

ct/

Type*

2021

(average

price/EUR/m3)

2022

(average

price/EUR/m3)

2023

(average

price/EUR/m3)

2024

(average

price/EUR/m3)

1st

quart

er

2nd

quart

er

3rd

quart

er

4th

quart

er

1st

quart

er

2nd

quart

er

3rd

quart

er

4th

quart

er

1st

quart

er

2nd

quart

er

3rd

quart

er

4th

quart

er

1st

quart

er

2nd

quart

er

3rd

quart

er

4th

quart

er

Spruc

e

sawlog

s

18-

24,9

cm 76,19 75,61

107,1

3

102,8

9

93,10 111,7

8 116,5 98,5 96,42

101,2

6 99,22 95,85 84,64 85,03 89,07 90,88

Spruc

e

sawlog

s

25-

31,9

cm 78,27 78,97

108,5

2

105,6

5

97,03 119,1

9

114,8

3 97,86 97,36

101,4

9 99,07 96,24 86,5 87,98 92,70 96,06

Spruc

e

sawlog

s 77,19 77,43

111,2

0

100,0

5

86,59 110,1 113,9

6 96,93 97,79

100,4

3 98,8 96,46 86,21 87,71 89,07 95,87

3

32+

cm

Pine

sawlog

s

18-

24,9

cm 89,42 93,44

114,7

2

114,4

2

99,65 114,6

1

143,9

7

136,7

7

105,5

5

108,1

7 104,1 98,19 90,54

101,5

1 89,06 93,05

Pine

sawlog

s

25-

31,9

cm

88,83 94,52 126,7

2

119,6

4 97,40

125,2

3

145,7

8

143,3

1

111,0

4

114,0

9

109,5

8

101,7

6 93,01

103,2

2 92,70 97,94

Pine

sawlog

s

32+

cm

85,93 89,59 125,8

9

114,6

1 89,91

124,5

7

141,9

6

139,3

6 114,4

114,9

2 113,8

104,3

3 95,29

104,7

3 94,88 99,48

2.4. Please indicate based upon which calculation principle has the average price been determined

(simple arithmetic average, weighted average price, etc.)?

Weighted average prices (excluding spoilage logs).

2.5. Please indicate whether the above price of spruce and pine sawlogs also includes transportation

costs for delivery to the buyer?

Yes, prices are quoted at the customer’s site, with the delivery term DPU – Delivered at Place

Unloaded (Incoterms® 2020).

What types of payments does the State Forest Management Centre make to the state budget, for

example, dividends, payments for the use of state capital, non-standard tax, concession payments for

the use of state assets, etc.?

RMK is a state-owned profit-seeking public institution whose activities are governed by the statute

of the State Forest Management Centre3.

According to the §10 section 14) of its statute RMK has the obligation to transfer the amount

determined by the Government of the Republic from the net profit to the state budget; (payment

scheme established on 2009).

The profit distribution is taxed similarly to the profit distribution of corporates i.e. subject to the profit

tax (Income Tax Act, §1 section4 (3).

RMK is subject to the VAT and social security tax at the terms similar to the typical business entities.

There are no other distributions to the state budget. But to note here, that certain activities and

obligations of the state (outside of the forest management) are performed by RMK (acquisition of

properties with economic restrictions etc.)

3 Riigimetsa Majandamise Keskuse põhimäärus–Riigi Teataja 4 Income Tax Act–Riigi Teataja

4

What is the planned and actual amount of these payments in the period from the years 2022 to

2025?

Please provide information on contributions to the state budget in the table below (please select the

appropriate payment types; please indicate contributions for the results of the relevant financial year,

regardless of the year of disbursement).

5

5 https://media.rmk.ee/files/RMK_majandusaasta_aruanne_2023.pdf (resource viewed 12.11.2025.). 6 https://rmk.ee/wp-content/uploads/2025/04/RMK_majandusaasta_aruanne_2024.pdf (resource viewed 12.11.2025.). 8 https://valitsus.ee/uudised/valitsuse-131125-istungi-kommenteeritud-paevakord (resource viewed 12.11.2025.).

2022 2023 2024 2025

Payme

nt type

Plan

ned

amo

unt

Actual

amoun

t

Actu

al

net

prof

it,

EU

R

Plan

ned

amo

unt

Actual

amount

Actual

net

profit,

EUR

Plan

ned

amo

unt

Actual

amoun

t

Actual

net

profit,

EUR

Plan

ned

amo

unt

Divide

nds

(e.g.,

%

from

the

sum of

net

profit

EUR

etc.)

75 040

0005

Net

profi

t:

138

352

000 119 600

0006

Net

profit:

119 64

6 000

7

35 482

0008

Net

profit:

57 426

000

9 35 48

2 000

Payme

nt for

using

state

capital

, EUR

X x

Non-

standa

rd tax,

EUR

X x

Conces

sion

payme

nts for

use of

state

assets,

EUR

X x

Other

type

(please

specify

), EUR

x

6

Please indicate the principles/criteria used to determine the above-mentioned payments by the State

Forest Management Centre into the state budget, including in which cases changes are made to the

amount of these payments within the year?

The principles and criteria for determining the payments made by the State Forest Management

Centre (RMK) to the state budget are defined by its statute and by state budgetary decisions.

Pursuant to Section 2 of the RMK Statute, RMK represents the state in the performance of its duties.

Under Section 10(1) of the Statute, RMK has both the right and the obligation to generate income

from its economic activities in order to maintain the state forest and to perform its public tasks. The

remaining net result is transferred to the state budget in an amount determined by the Government of

the Republic.

As a general principle, the remaining net profit is transferred to the state budget. The actual annual

payment amounts are calculated and decided within the framework of the State Budget Strategy,

based on multi-year financial projections. Specifically, the amounts are determined on the basis of

five-year financial forecasts prepared for RMK.

Under the current State Budget Strategy for the period 2026–2029, the annual profit transfer amount

is set at EUR 39.5 million. The profit distribution is subject to income tax at the rate of 22/78, which

results in a total amount of EUR 50.6 million being transferred to the state budget.

Changes to the amount of payments within a year may occur in cases where RMK’s actual profit

significantly exceeds the projected results. This was the case in the years 2021–2024, when

exceptionally high roundwood prices led to profits exceeding forecasts, and additional profit

distributions were therefore decided on the basis of actual results.

It should also be noted that the owner’s expectation establishing a 75% profit distribution ratio was

adopted in August 2025. The current State Budget Strategy for 2026–2029 was approved in

September 2025 and is based on the previous version of the owner’s expectation, which did not

specify a fixed distribution ratio. The transition to the 75% profit distribution principle will be

discussed and decided in the context of updated financial projections for RMK and subsequent

revisions of the State Budget Strategy during 2026.

In addition, part of RMK’s net result is retained for ongoing investments, such as the construction of

infrastructure and the acquisition of properties subject to management or environmental restrictions.

These investment needs are taken into account when determining the actual level of profit distribution

to the state budget.

We hope that the above provides adequate answers to the questions raised. Should you have any

further questions or require additional clarification, please do not hesitate to contact us.

Yours sincerely,

Tarmo Hellat

Head of internal audit

8 https://valitsus.ee/uudised/valitsuse-131125-istungi-kommenteeritud-paevakord (resource viewed 12.11.2025.). 9 https://rmk.ee/wp-content/uploads/2025/04/RMK_majandusaasta_aruanne_2024.pdf (resource viewed 12.11.2025.).