The Lithuanian President gives his blessing to the LEO LT. A busy week in the Lithuanian energy sector

February 12, 2008 at 9:47 pm 3 comments

LionThe Lithuanian President Valdas Adamkus signed the amendments to the nuclear power plant law on February 12.  The signed amendments gave way for establishment of a national investor company Leo LT, which to be involved in construction of a nuclear plant and energy links with the West. A day before the President told to the Lithuanian media that he would be criticised if either way, so he decided to sign the document.

The President issued statement to the nation saying that “I came to this decision without any outside influences, any persuasion attempts, and having considered all the discussions, what was said and requested, I did this following my own consciousness, thinking that this is the sole best decision for the future at this time.”
The law was actively discussed in Lithuanian public.  I would like to present few pros and cons from the discussion: 

Arguments against;

There are no calculations how much it will cost

Will the electricity for the Lithuanian consumer be cheaper

Will the Nuclear plant reduce Lithuania’s dependency on Russia

The privatisation of the NDX lacked transparency

The private investor got the best deal out of it, the stata was robed

The State will held less than two thirds of the shares

The private investor will control all process since the public sector is weakThere are not enough safeguards to obligate the LEO LT to build the plant and the links with Poland and Sweden

The process was not transparent, no competition, Adamkus had met with the NDX half a year ago without an official announcement, same with PM Kirkilas. and etc.Only 63 parliamentarians out of 141 voted in favour of this crucially important project

Inviting a Vilniaus Prekyba Goupr to the the project would go against President’s warnings about dangers of oligarchy in politics and business

Unclear if this merger will not clash with the new EU legislation on separation of the energy destribution and production

Construction of the Plant will divert Lithuania’s attention away from developing the renewable energy capacity

Kuodis, Lithuanian National Bank
Everything taking place in the Lithuanian energy sector after VST privatization is, to my mind, one big affair crowned by the national investor”. The legislation stipulates two different processes:
the construction of the nuclear power plant,
studies into its necessity and a determination to solve energy problems of the country or entire region on one hand and financing issues on the other.

“Now we see the national investor project pushed into the Seimas under the disguise of the nuclear power plant,” said the economic analyst. The decision to construct a power plant is followed by a year of design works, which do not require extensive funding and can be funded by the state.

Foreign investors should not be ruled out in the solution of the financing matter.Consequences of the legislation to ordinary users, in Kuodis’ words, should be described in relevant studies that were never carried out.

He said this led to fears that the new power plant could be not competitive.

Arguments in favour:

All process was clear and transparent

We cannot wait any longer, since our partners (the other Balts and Poland) might find another alternatives

There are enough safeguards against for the state

The private partner will give all project an energy, expertise and aggressiveness

The cooperation will create the strongest company in the region

The state could not afford finically to undertake such project on its own Vilniaus prekyba  (the private investor) arguments:

We’ve spoken out our clear and rooted attitude, that Lithuania must reach independence in the domain of energy”

The VP group assured of having made a commitment to the president to review controversially acclaimed draft settlement agreements.We have very explicitly committed to participate and we confirm this. This is a firm stance of our company”

We don’t want the Lietuvos Energija to be the mother company of the investor since we don’t want to build the Plant for the Russians

We live here; we will build the plant and the links to the West since we want our children to live in a free and prosperous Lithuania.

The President noted to having written a long letter to Prime Minister Gediminas Kirkilas: “I signed the law and right away wrote a letter to the prime minister, expounding on the entire situation, and setting certain conditions. I hope that the government, prime minister will pay due attention to those conditions outlined by myself and will manage this whole thing with the future in mind”.

As the BNS informs the main requirement made in the letter of the president, was that Lithuania’s interests be given due consideration, no parties be given privileges and the entire implementation of the project be transparent, clear and understandable to the Lithuanian people.

The PM Kirkilas told the press that he has not yet had the time to read the letter, however promised to take all of the president’s requirements into considerations, just as long as the “possibilities and legislation allow”.  “In the short run, after the main negotiator – the Economy Minister – returns from Poland, we will all sit down at a table and definitely implement all of the president’s proposals”, Kirkilas said.

The PM said he believes that Leo LT will be created by beginning of May, and will begin negotiations over establishing a common company with Latvia, Estonia and Poland shortly thereafter: “Those negotiations will not be simple either”.

The Lithuanian PM Kirkilas on the other hand will propose that the government form a supervisory committee for the national investor, which is to be involved in constructing a new nuclear power plant and energy links with Sweden and Poland.

According to the PM press office press release the committee would supervise and coordinate the activities representing the nation’s – as shareholder’s of Leo LT – interests and make respective proposals to the government about constant improvement of this activity, the governmental press service said.

The press service also stated that the prime minister will propose that representatives from the State Security Department, National Control, National Control Commission for Prices and Energy Commission, and respective ministries get involved in the activity of the new supervisory committee.

After signing the amendments the President went to Poland were he participated in signing the documents of creation a joint company joint company, which will build a link between the two countries.

Well, it has to be said that this week was exceptionally busy in the Lithuanian energy sector. This blog will write more about the latest Lithuanian Polish deal in Warsaw.

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Entry filed under: Baltic States, Economics, Energy, Estonia, Latvia, Lithuania, Northern Europe, Poland, Politics, Russia, Scandinavia, Sweden.

Lithuania – Sweden ‘Let’s get connected!’ The Baltic States should unite!

3 Comments Add your own

  • 1. Vince  |  February 13, 2008 at 12:36 am

    bad typo, bad grammar but valid points.
    Lithuania is in trouble now.

    Reply
  • 2. Ruslanas Iržikevičius  |  February 24, 2008 at 8:33 pm

    Thank you for the comment. Let me return you the compliment.

    Reply
  • […] 28, 2008 A deal to establish the Lithuanian Electricity Organization (Leo LT) was completed May 27. […]

    Reply

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