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Yesterday the Mayor of Kaunas Andrius Kupčinskas met with the representatives of Kaunas Heat and Power Plant, major heat supplier to KAUNO ENERGIJA, as well as GAZPROM and DUJOTEKANA shareholders. It was agreed to negotiate on the heat prices in Kaunas for the coming season. Successful results of negotiations relate to GAZPROM’s investment plans in Kaunas, namely here it is planned to construct a modern heat and power plant.

“Power plant was privatized in 2003, the deadline, during which it was undertaken to not increase heat prices, expired, said Mr Kupčinskas. It is high time we started negotiations. We agreed that together with the shareholders, representatives of the National Control Commission for Prices and Energy and heat distributors we will create negotiating groups to agree both on heat prices and investment.”

Situation was complex, because at that time when the contract for privatization of Kaunas Power Plant was signed the heat price in Lithuania was not subject to any regulation. Such regulating law was adopted later on. Should the power plant increase the heat price to KAUNO ENERGIJA according to the contractual formula now, the given price would increase roughly twice in Kaunas, i.e. up to 30 cents per kWh, being one of the highest rates in Lithuania.

“It had been for five years that the heat was supplied at a low contractual price, now it must be on an increase, said Denis Fiodorov, the Head of the Board at one of GAZPROM departments. We perceive that the price would be really high according to the formula, thus, we are concerned for successful negotiations. It is natural that their success is linked with further investment plans.”

As Mr Fiodorov states, GAZPROM would like to construct a modern power station in Kaunas, with the capacity reaching 40-320 MV. It would be completely sufficient to satisfy the needs for heat energy in Kaunas. Electricity, generated by this power plant, would amount to around 15-20 % of electricity needs in Lithuania; it would be distributed both to Lithuania and other Baltic States. It is alleged that the new heat and power plant would also lead to the reduction in the heat production cost price.

 

 

“Naturally, shareholders prefer to follow the privatization contract, said Rimandas Stonys, the Head of UAB DUJOTEKANA. Otherwise, further investment risk is likely to rise. Who could guarantee that after some time some other law is not adopted again to make absolute change in the current situation? How could investors predict investment payback in such a case?”

Mr Kučinskas stated to Verslo žinios that during the conversation with him Mr Fiodorov had mentioned that successful negotiations would lead GAZPROM to prompt construction of the power plant, as it would be preferred to make best use of the period when Ignalina Nuclear Power Plant would be closed and the new would not be constructed yet. The Mayor expects that in the course of negotiations the adopted guidelines would compromise both of the parties and conform to the spirit of the law.

“It’s a petty that these negotiations are hardly of any concern to the national authorities, as there was no one else to be present, except for the National Control Commission for Prices and Energy, said he. Yes, heat price will affect only Kaunas. Nevertheless, the new power plant would become an essential factor in the national market of energy, in particular after the shutdown of the nuclear power plant. But we remain alone to negotiate in terms of it.”

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