Lithuania completed creation of energy Co Leo LT
A deal to establish the Lithuanian Electricity Organization (Leo LT) was completed May 27.
The Lithuanian state and the private investor NDX Energija, signed a shareholders agreement and increased the authorized share capital of the Leo LT to 5 billion LTL (EUR 1.45 b) from 0.5 million LTL.
The government and NDX Energija transferred the ownership of its shares. The shares in the three companies were registered as being in the ownership of Leo LT with the country’s Central Securities Depository.
Leo LT has an authorized share capital of 5 billion LTL (EUR 1.45 b), divided into 500 million shares with a nominal value of 10 LTL each. The share capital was increased on May 27 through contributions in kind by the shareholders at an issue price of 14.28 LTL a share.
The government owns 61.7 % of shares in Leo LT and NDX Energija, owns a 38.3 % stake
The creation has opened the way for the country to start talks with Polish, Latvian and Estonian energy companies on building a new Nuclear Plant.
The Leo LT is to begin on June 16 formal talks with Polish, Latvian and Estonian energy companies to establish a joint venture for the construction of a new nuclear power plant. The Lithuanian Minister of Economy Mr Navickas said to the BNS “We will do all we can to ensure that the joint venture is established as soon as possible. The most important thing is not to lose our partners”.
In addition Mr Navickas said the government first wants to take decisions on the planned spin-off.
Under agreements on the establishment of Leo LT, the two power generating subsidiaries of state owned Lietuvos Energija (the Kruonis Hydro Pump Storage Plant and the Kaunas Hydro Power Plant) are to be spun off into separate companies within 24 months after the deal was finalized. The government will then take over the ownership of the plants for a symbolic price of 1 LTL.
NDX Energija, one of the two shareholders of Leo LT also intends to offer up to 1.5 % of shares in the newly established energy company for public trading.
Hence, It is unclear how LEO LT will start negotiations with Poland since Warsaw demands 1,000 kW from the New N Plant. The producing capacity of the new N Plant will be determined only after the environmental study that is due in August. Furthermore, Mr. Stankevičius the head of NDX Energija some days ago mentioned that if it will be difficult to negotiate with our future partners Lithuania would be fully capable of building a plant on its own.
However, this goes against the Lithuanian strategic purpose of connecting its electricity grid with the Western Europe via LitPol Link which was eventually (after 10 years) started last week. It is clear that the Poles are interested in building this link only if they are going to get enough electricity from the N Plant.
Clearly, the creation of the LEO LT will give a huge boost in the negotiations with the other partners. There were unsatisfactory noises from the other partners about the slow process of the LEO LT creation. The Lithuanian PM Kirkilas admitted that the Lithuanian side is late, but only two months behind the schedule.
Kirkilas is also convinced that the establishment of the LEO LT will give an advantage in arguing the case for prolonging of the old Ignalina for few more years. After meeting Barroso and Piebalgs on the sidelines of an international nuclear energy conference in Prague last week he said to the BNS that;
“In my view, we are making headway. They no longer say, as they used to say earlier, that there is nothing to speak about because it is Lithuania’s commitment to shut down the second block. Now they speak about the need to find a legal formulation and a solution for a possible extension of operation until 2012″.
The reaction from the Head of the EU representation Mr Sadauskas replied immediately; “No signal, not even the slightest one. The commitments remain in place”.
Some of the Lithuanian Commentators called the creation of the Leo LT as important as the sell of the Mažeikių Nafta oil refinery to the US Williams International. There was a lot of negative publicity against the sell off of the refinery since it was soled to the Americans rather cheep. However, it worked out well in the long run. Lets hope that the creation of the Leo LT will achieve its objectives, such like building the N Plant with the partners, connect Lithuanian electrical grid with Sweden and with Poland, and it will do it as quick as possible.