Heat Price for Kaunas to Be Calculated by GAZPROM Too
2008-07-23
Public representations by Kaunas politicians, referring to the fact that the heat price will not grow for Kaunas inhabitants until the end of the year, were welcomed by responses from the shareholders of heat producer Kaunas Heat and Power Plant (KHPP), namely the Russian gas concern GAZPROM and the company DUJOTEKANA. Yesterday, Kaunas Mayor Andrius Kupčinskas welcomed Denis Fiodorov, representative of GAZPROM, from Moscow and Rimandas Stonys, the Head of DUJOTEKANA. In the presence of Virgilijus Poderys, the Chairman of the National Control Commission for Prices and Energy, at a closed meeting it was resolved to form a working group to be made of representatives of the municipality, NCCPE and the owners of KHPP. In the course of one to two weeks the working group shall adjust the new heat price in Kaunas.
“Price regulation amends the terms and conditions of the contract of Kaunas Power Plant privatization. Situation is slightly complicated. It will take two weeks to coordinate that investor and urban interests do not conflict with the law”, after the meeting said Mr Poderys.
R. Stonys: “This Does Not Satisfy the Investor”
In 2003, when GAZPROM and DUJOTEKANA acquired the heat and power plant from the enterprise KAUNO ENERGIJA, controlled by municipality, the sales contract provided for the heat tariff calculation formula and it was agreed that new owners would be entitled to raise the heat price after 15 years. Given such right, which had to be valid for 15 years, the new owners of KHPP failed to exercise it during the period of five years. This year, being the necessity to raise the tariff, but upon the changes in the law, raise of heat tariff must be already adjusted with the NCCPE.
Head of DUJOTEKANA R. Stonys noted that situation was ambiguous. “The rules of the game changed on the 1st of May. Heat price must already be regulated by the NCCPE. This does not satisfy the investor. There is willingness to follow the sales contract of KHPP, signed in 2003. We realize that Kaunas authority wants to defend the residents’ rights. We should yet think of investor’s interests too. How should he predict investment payback? Provided he invests over 300 million EUR and some law becomes amended all of a sudden”, deliberated Mr Stonys.
No Anger is Desired
According to GAZPROM representative Mr Fiodorov, the terms and conditions laid down in the purchase contract of the power plant have change over five years. “We are forced to shift to the other tariff calculation formula, other than the one specified in the contract”, felt concerned Mr Fiodorov.
On the other hand, owners of KHPP intend to construct a new power plant next to the old one; therefore, they are not concerned with being at odds with the authority of the city. Kaunas Municipality, in turn, is likely to attract new investment into the city, thus, it is likely to conduct any negotiations with KHPP shareholders.
Current heat price in Kaunas equals 14.67 cents per kilowatt-hour. In case the heat price is not regulated the tariff may reach 20 cents per kilowatt-hour. “We are alert to any compromise. It is necessary that the heat price in Kaunas is as lower as possible. On the other hand, we are aware that KHPP needs new investment”, said Mr Kupčinskas, the Mayor of the provisional capital.
© Respublika
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