Prime Minister Andrius Kubilius (right) speaks with energy minister Arvydas Sekmokas. The Lithuanian government's has made a concerted effort to weaken Gazprom's hold over the Lithuanian heating market, and the prime minister's office said last week's demand could be a form of retaliation.
VILNIUS — On Friday Lithuanian Prime Minister Andrius Kubilius downplayed Gazprom’s demand of €140 million to recover lost profits from the Kaunas Heat and Power Plant, saying the government is merely a third party.
Meanwhile Kubilius’ office said Gazprom would lose if it took the case to court and said the Russian energy giant was likely playing games in light of the Lithuanian government’s policy of diversifying the heat market, thereby reducing Gazprom’s control of the market.
Gazprom, the Russian state-owned energy company, bought the Kaunas Heat and Power Plant from the Lithuanian government in 2003 for 116.5 million litai (€33.7 million) with the condition of making a set margin on energy prices until 2018. Since then laws affecting the costing out of heat have allowed the [private_supervisor]price to change and on these grounds, Gazprom is demanding compensation for its losses, as it indicated in a letter to the Lithuanian government Thursday.
“Gazprom’s claims for alleged damages is purely a legal dispute between … the Kaunas Heat and Power Plant, owned by Gazprom. In this dispute in the state is a third party,” Kubilius said in a statement to the press.
Kubilius pointed out that regardless of any contract terms between Gazprom and a Lithuanian company, the state can regulate heat and energy prices.
Gazprom announced in September that it would like to construct a new power plant in Kaunas rather than modify the existing one, but the Lithuanian president and Kaunas municipal government opposed the move. Meanwhile the government is building waste incinerators to wean Lithuania off of Gazprom.
As long as the municipality is against the new plant, it cannot be built within city limits. Gazprom said it was moving forward with its plans anyway. Lithuania’s energy policy has shifted with the change of governments before, as was witnessed with the LEO LT debacle, and the plant was not planned to be built until 2013.
“The project of the power plant in Kaunas has not been brought to halt and has never been postponed. Investment into the energy economy was one of the conditions for privatization of the power plant and we are planning to satisfy these conditions,” Valery Golubev, deputy chairman of Gazprom’s board of directors, said in a statement to the press last year.
The prime minister’s office said it saw a connection between disagreements about building a new plant in Kaunas and Gazprom’s more than hundred-million euro demand for compensation.
“I think it’s related — not only the president said that Kaunas doesn’t need such an enterprise. Kaunas is of the same opinion that they should follow their obligations and invest into the power plant that they privatized. They aren’t investing. Instead of that, they want to build a new one. Kaunas is saying they don’t want that,” Virginijus Valentinavičius, a political adviser to the prime minister, told Baltic Reports. “Everyone is ready to take Gazprom to court — we are not afraid.” [/private_supervisor] [private_subscription 1 month]price to change and on these grounds, Gazprom is demanding compensation for its losses, as it indicated in a letter to the Lithuanian government Thursday.
“Gazprom’s claims for alleged damages is purely a legal dispute between … the Kaunas Heat and Power Plant, owned by Gazprom. In this dispute in the state is a third party,” Kubilius said in a statement to the press.
Kubilius pointed out that regardless of any contract terms between Gazprom and a Lithuanian company, the state can regulate heat and energy prices.
Gazprom announced in September that it would like to construct a new power plant in Kaunas rather than modify the existing one, but the Lithuanian president and Kaunas municipal government opposed the move. Meanwhile the government is building waste incinerators to wean Lithuania off of Gazprom.
As long as the municipality is against the new plant, it cannot be built within city limits. Gazprom said it was moving forward with its plans anyway. Lithuania’s energy policy has shifted with the change of governments before, as was witnessed with the LEO LT debacle, and the plant was not planned to be built until 2013.
“The project of the power plant in Kaunas has not been brought to halt and has never been postponed. Investment into the energy economy was one of the conditions for privatization of the power plant and we are planning to satisfy these conditions,” Valery Golubev, deputy chairman of Gazprom’s board of directors, said in a statement to the press last year.
The prime minister’s office said it saw a connection between disagreements about building a new plant in Kaunas and Gazprom’s more than hundred-million euro demand for compensation.
“I think it’s related — not only the president said that Kaunas doesn’t need such an enterprise. Kaunas is of the same opinion that they should follow their obligations and invest into the power plant that they privatized. They aren’t investing. Instead of that, they want to build a new one. Kaunas is saying they don’t want that,” Virginijus Valentinavičius, a political adviser to the prime minister, told Baltic Reports. “Everyone is ready to take Gazprom to court — we are not afraid.” [/private_subscription 1 month] [private_subscription 4 months]price to change and on these grounds, Gazprom is demanding compensation for its losses, as it indicated in a letter to the Lithuanian government Thursday.
“Gazprom’s claims for alleged damages is purely a legal dispute between … the Kaunas Heat and Power Plant, owned by Gazprom. In this dispute in the state is a third party,” Kubilius said in a statement to the press.
Kubilius pointed out that regardless of any contract terms between Gazprom and a Lithuanian company, the state can regulate heat and energy prices.
Gazprom announced in September that it would like to construct a new power plant in Kaunas rather than modify the existing one, but the Lithuanian president and Kaunas municipal government opposed the move. Meanwhile the government is building waste incinerators to wean Lithuania off of Gazprom.
As long as the municipality is against the new plant, it cannot be built within city limits. Gazprom said it was moving forward with its plans anyway. Lithuania’s energy policy has shifted with the change of governments before, as was witnessed with the LEO LT debacle, and the plant was not planned to be built until 2013.
“The project of the power plant in Kaunas has not been brought to halt and has never been postponed. Investment into the energy economy was one of the conditions for privatization of the power plant and we are planning to satisfy these conditions,” Valery Golubev, deputy chairman of Gazprom’s board of directors, said in a statement to the press last year.
The prime minister’s office said it saw a connection between disagreements about building a new plant in Kaunas and Gazprom’s more than hundred-million euro demand for compensation.
“I think it’s related — not only the president said that Kaunas doesn’t need such an enterprise. Kaunas is of the same opinion that they should follow their obligations and invest into the power plant that they privatized. They aren’t investing. Instead of that, they want to build a new one. Kaunas is saying they don’t want that,” Virginijus Valentinavičius, a political adviser to the prime minister, told Baltic Reports. “Everyone is ready to take Gazprom to court — we are not afraid.” [/private_subscription 4 months] [private_subscription 1 year]price to change and on these grounds, Gazprom is demanding compensation for its losses, as it indicated in a letter to the Lithuanian government Thursday.
“Gazprom’s claims for alleged damages is purely a legal dispute between … the Kaunas Heat and Power Plant, owned by Gazprom. In this dispute in the state is a third party,” Kubilius said in a statement to the press.
Kubilius pointed out that regardless of any contract terms between Gazprom and a Lithuanian company, the state can regulate heat and energy prices.
Gazprom announced in September that it would like to construct a new power plant in Kaunas rather than modify the existing one, but the Lithuanian president and Kaunas municipal government opposed the move. Meanwhile the government is building waste incinerators to wean Lithuania off of Gazprom.
As long as the municipality is against the new plant, it cannot be built within city limits. Gazprom said it was moving forward with its plans anyway. Lithuania’s energy policy has shifted with the change of governments before, as was witnessed with the LEO LT debacle, and the plant was not planned to be built until 2013.
“The project of the power plant in Kaunas has not been brought to halt and has never been postponed. Investment into the energy economy was one of the conditions for privatization of the power plant and we are planning to satisfy these conditions,” Valery Golubev, deputy chairman of Gazprom’s board of directors, said in a statement to the press last year.
The prime minister’s office said it saw a connection between disagreements about building a new plant in Kaunas and Gazprom’s more than hundred-million euro demand for compensation.
“I think it’s related — not only the president said that Kaunas doesn’t need such an enterprise. Kaunas is of the same opinion that they should follow their obligations and invest into the power plant that they privatized. They aren’t investing. Instead of that, they want to build a new one. Kaunas is saying they don’t want that,” Virginijus Valentinavičius, a political adviser to the prime minister, told Baltic Reports. “Everyone is ready to take Gazprom to court — we are not afraid.” [/private_subscription 1 year]
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