Let us save clean environment for future generations
Press center
“Gazprom” to Begin Investment Dispute with Lithuania
2010-03-05
Russian gas concern GAZPROM notified the Lithuanian Prime Minister Andrius Kubilius of initiation of an investment dispute.
The ground for such conflict was instigated after the State of Lithuania started applying the methodology for heat price fixing to Kaunas Heat and Power Plant (KHPP), run by the concern. Price regulation caused hundreds of millions in damage.
As noted in the official letter to the PM by Valery Golubev, the Deputy Chairman of the Management Board of GAZPROM, the Russian concern GAZPROM undertook the obligation to refrain from changing the price of heat generation under the contract for the purchase of Kauno elektrinė of 2003, whereas later, namely from the spring of 2008, it was obliged to set prices under the formula linked to the movements of prices of oil products on the European market.
GAZPROM, the major shareholder of Kaunas Heat and Power Plant, kept its commitment. From 2003 to 2008 Kaunas Heat and Power Plant was producing heat without raising its price. Once the given period terminated KHPP-generated heat was subject to mandatory pricing.
It is estimated that just during the period from 2003 to 2008 the Russian gas concern suffered the damage costing around 342.22 million litas due to the procedure for heat price calculation, as adjusted by the State of Lithuania, which is likely to be on the rise on an annual basis.
Thus, GAZPROM proposes to the Lithuanian Government to settle this dispute through peaceful means and pay to the concern the foregoing amount as a compensation of the damage suffered.
Moreover, the letter of the gas concern emphasises that in case the Lithuanian State continues to ignore the international obligations, undertaken under the agreement with the Russian Federation concerning investment protection, GAZPROM will be forced to refer to arbitration concerning the indemnification of damage.
“Objections by the Russian concern demonstrate the concern of the major KHPP shareholder with the resultant situation. Representatives of GAZPROM themselves are obliged to advise of the further actions”, stated Antanas Pranculis, the Director General of KHPP.
Similarly, he highlighted that the recent decision of Vilnius Court of Commercial Arbitration concerning the reimbursement of 5.4 million litas from KHPP in favour of Kauno energija may lead to new mutual claims to be addressed together and by peaceful means, first of all, responding to the interests of heat consumers in Kaunas city.
KHPP refrains from any comments in terms of arbitration decision. This issue is to be dealt with within the context of GAZPROM’s claim against the Lithuanian Government.
For more information:
Žilvaras Zinkevičius
Account manager
Public Relations Agency "Avenire"
Mob. +370 603 30255; Tel./fax. +370 5 2608441
E-mail: zilvaras@avenire.lt