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Dispute on the penalty has already reached court. About this and not only we had an interview with Antanas Pranculis, the Director General of KHPP, which generates heat to Kaunas.

 

- Could you, please, comment about the situation on the penalty to KAUNO ENERGIJA.

- KHPP and Kauno elektrinė are planning to invest not 400 million litas, as previously undertaken, but 1 billion litas, therefore, investment liabilities will be satisfied and performed more than that. However, shift to the other financial liability, being several times bigger, requires time. Penalty was added to the contract as a security in pursuance of investment implementation. The estimated 17.7 litas is far from being the source for making profit. The company will meet its liabilities, the new power plant will be constructed, which will become the most modern plant in Lithuania, whereas the production process will be the most economical. Kaunas users will keep on receiving heat at the lowest price in Lithuania.

 

- Last Thursday Vilnius Court of Commercial Arbitration was served the action on the penalty. Is your company ready to litigate?

- Currently, a businesslike dialogue is taking place between KHPP and KAUNO ENERGIJA. We are in an awkward situation, which occurred as a result of several issues: global economic crisis and strategy readjustment. We plan to construct a power plant, which would be four times more powerful than it was predicted in the course of the initial stage. This requires detailed calculations. However, should some of Kaunas politicians care about the objective to get 17 million litas by any means rather than investment into the city and heat consumers, KHPP is ready to litigate at the court of arbitration.

 

- What precise works have already been completed as concerns the building project of the new thermal power plant?

- Construction process of the new thermal power plant is underway. All the works are being executed consistently – step by step. The permit for the construction has been obtained from the Ministry of Economy, environmental impact assessment has already been carried out and the report has been adjusted with the residents and the company Board. At the moment selection of the engineering technical supervisor is coming to an end. Presently no information about the procedure is made public because this may have negative effect on final proposals of the tenderers. After signing the contract with the successful tenderer information will be made public and available to the society.

 

- What are the integral obstacles in implementing the project of the new power plant?

- In 2006 it was the beginning of the process that lasted during the entire year of 2007. The strategy was reviewed so as to come across with the optimal solution both to the city and the consumers. Having assessed the European economic strategies, changes in the energy markets, shutdown of Ignalina Nuclear Power Plant and the appearance of the new electricity connections with Europe, decision to build a heat and power plant in the capacity of 320-350 megawatts was reached. A power plant of such type is able to use fuel in the most efficient way and produces both heat and electric power.

 

- Won’t it happen so that after GAZPROM decides to increase the heat prices Kaunas residents will be used as scapegoats?

- Assertions that the concern GAZPROM will impose its own prices and thus harm Kaunas inhabitant would be a lie. KHPP is an enterprise registered in Lithuania. Any expenses for the construction of the new power plant will be covered by KHPP and Kauno elektrinė. Heat prices in Lithuania are controlled by the National Control Commission for Prices and Energy (NCCPE), which determines how much the final user has to pay. Thus, GAZPROM has absolutely no influence on the heat price.

 

- What could you tell to the critics that state that the new power plant would just raise Lithuania’s dependence on gas and Russia?

- Today the price of gas is lower than that of the fuel oil by almost 100 USD. Therefore, the major fuel type is gas. However, the power plant is in possession of reserve capacities of fuel oil and would be able to use this type of fuel during the coldest period for even 30 days in case of any disruption in gas supply. During the given period of time it would be possible to purchase additional fuel oil from Mažeikių nafta refinery or even Rotterdam market.

Maybe GAZPROM would dare to disconnect Lithuania from gas supply, but I doubt whether this is possible. To my mind, such discourses are made at the level of conspiracy theory and have no grounds at all. This proves that dependence on the Russian gas is not as huge as it is described by some politicians. In my opinion the dependence on Russophobia is much greater.

 

- Why didn’t the price of heat, produced by the power plant, change for even half a year when the gas price was going down?

- It has been for five years that KHPP has not made any changes to the price of heat generation even though the gas price increased by several times over the same period. Only from December 2008 NCCPE established the heat production price for six months following the methodology that was applied also to other heat production companies in Lithuania.

From June of the current year heat production price has decreased by 2.28 cents per kilowatt-hour (down to 10.48 cents). Earlier the decline in the heat price occurred in April. From the very beginning of the year KHPP reduced the heat price even by 29 %. From the 1st of June NCCPE approved the lower price to KAUNO ENERGIJA too, which distributes heat to the end user.

 

- A lot of disputes at the Council of Kaunas City arose in terms of the renewal of the steam pipe to the company “Korelita”. Why do we need this project?

- This steam pipe is necessary to the city but not KHPP, which will also be obliged to invest its funds into its construction. Upon the failure to renew the steam pipe in due time, “Korelita” would not receive steam at favourable prices and would hardly compete with its production on the world market. It is very probable that the plant may be closed down. Five hundred people would loose their job, whereas the State and the city would loose taxes.

 

- Wasn’t it the attempt of GAZPROM to force its way through Lithuania into the money of the EU funds?

- EU money for the construction of the steam pipe are necessary not to GAZPROM. All investment will be implemented in Kaunas, the steam pipe will rise in Kaunas and not somewhere in Russia. Thus, discussions that GAZPROM forces its way through Lithuania into the EU money are a real nonsense. This is a mere outcome of cheap politics in the Council of Kaunas. It is against the will that KHPP is entangled into the disputes between the current urban government and the previous one, being in opposition now.

Municipality’s approval was indispensable so that KHPP would get a part of funds from the EU Structural Funds for project financing. Now an application to the Lithuanian Business Support Agency will be submitted.

 

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