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Shortly, Kaunas and all Lithuania will start the heating season. This year consumers are awaiting it with great worries because the price for heating will be record high. An average increase in prices in Lithuania shall reach about 40 %.

“Over five years prices of natural gas imported from Russia had been in constant skyrocketing. Once the formula for the calculation of heat price is applied, the heat is to be sold at a more expensive price. However, we are aware of how much the city population spends on heating and, with reference to public interests of Kaunas inhabitants, we will pursue the application of a substantial discount”, stressed Mr Pranculis, the Head of KHPP.

According to him, the price will reach 12-13 cents per kilowatt-hour. The price being almost twice as bigger as the earlier one though, Kaunas residents will pay the heat price being less than the one applied for Klaipėda or Vilnius residents.

Producing heat to Kaunas, KHPP will continue preserving attractive heat prices by renouncing part of its profit. Recently, Valerij Golubev, the Deputy Chairman of the Board of the Russian gas concern GAZPROM, notified the Lithuanian Prime Minister Mr Kirkilas that the principal KHPP shareholder was ready to apply a significant discount on the heat price. According to Mr Golubev, following the contract with KAUNO ENERGIJA, in 2005 already the power plant was able to raise the heat price, but did not use this chance.

Representative of GAZPROM believes that it would be expedient to establish such price of heat, produced by KHPP, which would cover sustained losses and guarantee the return of investment into the construction of the new power plant.

This was the reaction of the representative of GAZPROM to the objectives of the Lithuanian Government to establish the heat price for KHPP, though the long-term contract between the latter and KAUNO ENERGIJA, signed in 2003, lays down that KHPP heat price is determined according to the prices of petroleum products in the European markets.

“It had been for five years that KAUNO ENERGIJA received heat at a lower price than the one in the market. Therefore, heat price to Kaunas residents was one of the lowest in Lithuania”, added Head of KHPP Mr Pranculis.

 

 

As it had been announced already, much turmoil into routine was brought by the Law on Heat Sector, last year amended by the Seimas. Following the Law, KHPP must adjust the price of heat it produces with the National Control Commission for Prices and Energy despite the investment agreement signed earlier.

Over five years KHPP did not change the heat price, though it was entitled to do so, whereas today, where the contractual terms and conditions oblige establishing the price according to the formula linked to the changes in the prices of petroleum products in Europe, national and Kaunas governments want to change the rules of the game.

 

Due to the abovementioned, KHPP and its shareholder GAZPROM were forced to review investment plans on the construction of a new thermal power station in Kaunas. It was planned that investment value into one of the most modern thermal power plants in eastern and central Europe would make up one billion litas.

“Such a demand of the Commission for Prices means that it does not virtually recognise the terms and conditions of the contract, signed five years ago, and intends to establish the price of heat sold by KHPP. Thus, we have already applied to court seeking for clarity”, stated the Director General of KHPP Mr Pranculis.

Civil Code of the Republic of Lithuania defines that any amendment to laws shall not replace any earlier agreements.

 

 

As Mr Pranculis states, the Commission ought to establish such heat price that is paid by the end user, but not the one at which KHPP sells heat to the distributor, i.e. KAUNO ENERGIJA. As far as is known, price of heat supplied to the residents includes producer’s price and that of heat distribution.

Held in Kaunas, in July negotiations between the representatives of GAZPROM and KHPP with the heads of Kaunas City Municipality, KAUNAS ENERGIJA, controlled by the latter, and the National Control Commission for Prices and Energy focused on the procedure for establishing heat price. Unfortunately, negotiations ended without results.

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