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“Since 2010, following the decision of the European Union, Ignalina Nuclear Power Plant is not operating any longer, thus, there is the possibility to significantly increase the supply of competitive Russian energy into Lithuania. This allows making complete use of the capacities of the Central and Northwestern Russian power plants and reinforcing Russia’s strategic participation in the Baltic region”, announced “Inter RAO JES”.

Russian enterprise is ready to overload Lithuania and other Baltic countries, which remained without the cheap electric energy producer from January, with its electricity. “Inter RAO JES” announces that within one year it is planned to supply around 4 billion kilowatt-hours of electric power “into Lithuania and/or Latvia and/or Estonia”.

This would make up almost a half of electricity demand in Lithuania because this year it is planned to consume about 9 billion kilowatt-hours of electricity.

“Inter RAO JES”, together with the company “Inter RAO Lietuva” (former Energijos realizacijos centras) in Lithuania, has several long-term agreements of electricity supply up to 2020. Russian enterprise “Inter RAO JES” holds the controlling stock of “Inter RAO Lietuva”.

 

“Electricity network dependence on the Russian system is a highly risky matter in terms of the Lithuania’s safety; it would not allow Lithuania getting rid of the “energy island” status in the European Union, whereas in the absence of connections with the other EU Member States, no one would decide to invest into more serious energy projects in Lithuania”, asserted Tomas Janeliūnas, associate professor of the Institute of International Relations and Political Sciences.

According to Mr Janeliūnas, noticeably lower prices of imported electric energy, in particular if all import is controlled by one company related to the Russian electricity monopolist, may reduce the attractiveness of the future nuclear power plant construction.

In such a case it would be sufficient to sort of dump prices for a short period in order to deter potential strategic investors willing to invest into the construction of a new nuclear power plant in Lithuania. This in turn would be likely to impede the connection of the Lithuanian electric network with Poland to a greater extent and would leave Lithuania in the Russian electric energy system for a long period.

 

It is the case that the Russian energy specialists are closely related to the Lithuanian politicians. Giedrius Balčiūnas, Director of “Inter RAO Lietuva, owned by the Russian enterprise, is the brother-in-law of the former member of the Seimas, the influential conservatist Ramūnas Garbaravičius. Arvydas Garbaravičius, the brother of R. Garbaravičius, is the member of the Liberal and Centre Union and runs an office in the Council of Kaunas city. Jonas, the son of R. Garbaravičius, is the chairman of the Board of “Scaent BALTIC”, the company selling Russian electricity, and the member of the Board of “Inter RAO Lietuva”.

Recently, R. Garbaravičius has become the member of the Board of the energy and innovation company ELAI.

As the energy experts state, it is not surprising that the abovementioned politicians support the import of electric power; their business does not welcome the creation of local electric energy production sources. Attempts to block construction works of the new power plant and signing of a long-term contract with “Inter RAO Lietuva” impede the rise of the Western investors in Kaunas.

Considering from the short-term outlook, import of electricity from Russia allows the consumers winning because they are supplied cheaper electricity. However, no one is able to negate that by dumping electricity prices “Inter RAO Lietuva” aims at conquering the Lithuanian electricity market and attempts at eliminating local producers. “Inter RAO Lietuva” will become the monopolist of electricity market and will be able to dictate its own prices.

Aggressive market conquest is proved also by ungrounded electricity price fluctuations. Last June, when Ignalina Nuclear Power Plant was in operation in Lithuania, electricity imported by “Inter RAO Lietuva” cost 19 cents, whereas at the present moment 13-14 cents per kilowatt-hour. Meanwhile, Russian residents of the European zone pay 16 cents per kilowatt-hour of electricity. Should such prices continue to be dictated, “Inter RAO Lietuva” will exclude local producers from the market and become the sole electricity source for Lithuania.

Should the conditions in the Lithuanian electricity market be dictated by “Inter RAO Lietuva”, owned by the Russians, any future electricity connections with Sweden and Poland will be deprived of their purpose. Lithuania will not have any surplus energy to be able to export it and, thus, implement its strategic energy-related objectives.

 

Taking a look at the recent events at Kaunas Municipality, it may be concluded that Lithuanian representatives of Russian energy specialists demonstrate marked influence in the city. Kaunas politicians prevent the implementation of projects meant for the modernisation of urban heat economy, which has depreciated to a critical threshold.

Andrius Kupčinskas, the head of the city that lacks money even for paying salaries to municipality employees, announced that the project for the construction of a new Kaunas combined heat and power plant, worth one billion litas, is far from being worth any interest to him during the hard times; this is the matter of private investors.

Kaunas Municipality has received the request from a well-established German insurance company “Hermes”, which is ready to insure the project of combined heat and power plant, to express its position regarding the construction of a new power plant in Kaunas. However, head of the city announced that he had no intention to interfere into the affairs of private businesses.

Mr Kupčinskas explains that implementation of the project is for the benefit of businessmen, as well as their risk and responsibility, which is not to be undertaken by the municipality or affected in whatsoever manner.

Businessmen, implementing the project, show their surprise that the city is treating a billion-worth investment as totally irrelevant even though municipality is not requested to allot money, guarantees or any other liabilities. It is asked only to give support to the project so that the German commercial banks are able to grant credits at more attractive conditions.

Investment project is implemented by Kaunas heat generating company Kaunas Heat and Power Plant (KHPP), which will be soon joined by investors from the Western Europe. The new power plant is under construction because the old one is at a critical operation threshold. After five years it will not meet environmental requirements of the European Union, as well as technological standards of the Union for the Co-ordination of Transmission of Electricity of Western and Central European countries, thus, it will be brought to the shutdown.

Apart from KHPP, Kaunas power plant investment project engages also the Western European investment pension funds that will own half of Kaunas power plant shares. Combined heat and power plant, which would generate both heat and electric power, is planned to be constructed in Kaunas.

“No other kind of power plants, except for the power plants of combined heat and power or those using renewable sources, is constructed at the moment. Any other technologies are already in the past. Maybe someone fears that we construct a huge gas-fired power plant. Nevertheless, there are laws that oblige us to buy in all the energy from renewable sources, therefore, such sources have an explicit priority and the new power plant is not any competitor to them.

Alternative energy sources require reserve sources that could supply cheap energy to the network, for example, in the absence of wind”, stated academician Jurgis Vilemas, the Chairman of the Science Council of Lithuanian Energy Institute.

 

Uproar among Kaunas politicians, who envisaged evil plans, was caused by the tender of Kauno energija for the rent of Petrašiūnai Thermal Power Plant for 20 years. However, energy experts are sure that this choice is reasonable.

One of the opposition leaders in Kaunas Council, the liberalcentrist Arvydas Garbaravičius was sure that highly strict requirements to tenderers would significantly reduce the list of potential candidates. The politician made assumptions that the tender for the power plant rent had been prepared for a sole company, i.e. KHPP.

Despite the results achieved by the hysteria of the conservative Gediminas Žukauskas and liberalcentrist Arvydas Garbaravičius, i.e. the tender was terminated, it was discovered that the Russian capital, which was purportedly claiming its candidacy to Petrašiūnai Power Plant, was gone with the wind.

Tender documents were acquired by the company “Energotiekimas”, associated with the former head of LEO LT Rymantas Juozaitis, “Aidarsa”, “E Energija”, “Litesko”, the founders of which are the European Bank for Reconstruction and Development and the French concern “Dalkia”, “Axis Industries”, “Miesto energija” and “Energijos sistemų servisas” (“Energy Systems Service”), a great part of shares of which is held by the Swiss investors.

Rent of Petrašiūnai Power Plant was the plan of investment and financial sources of Kauno energijafor 2008-2011, supported by recommendations of scientists and energy experts, which established the design and installation works of biomass incinerator with a gas turbine.

Rent of the power plant was pursued aiming at the implementation of the EU directives regulating biofuel production and use, as well as the provisions of the National Energy Strategy of the Seimas. This project would have granted the possibility to Kaunas to purchase heat not only from KHPP but also from alternative energy sources; the city would produce ecological heat.

 

Perspectives for the development of Petrašiūnai Power Plant by using biofuel for energy and heat generation were recommended by the studies for the development and modernisation of the company Kauno energija, conducted by the Lithuanian Energy Institute and Kaunas University of Technology. The study by the Lithuanian Energy Institute on the modernisation of Petrašiūnai Power Plant by introducing the use of biofuel named the amount of 100 million litas. These estimates were welcomed also by the Supervisory Board of Kauno energija.

As the company itself lacks financial possibilities to install biofuel boilers at Petrašiūnai Power Plant, already in summer the management of Kauno energija decided to prepare a perspective plan of the power plant to attract investment. Thus, in October the tender for rent was announced with a prior notice given to the Supervisory Board, where the majority is composed of members delegated by the city municipality.

Funds from rent would have substantially contributed to the income of Kauno energija, undergoing not the best times, required for modernisation of heat economy. Moreover, this would allow increasing reliability of heat supply to consumers and competition among producers.

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