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Tuesday 25.09.2018 | Name days: Rauls, Rodrigo

Former head of energy pricing body deals a blow to Lithuania and President

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Lithuanian President President Dalia Grybauskaitė

Linas Jegelevičius for the BNN

The pendulum in 120 million euro lawsuit against Lithuania may have swiftly shifted in favour of France‘s energy giant Veolia, after Diana Korsakaitė, former chairwoman of Lithuania‘s National Commission for Energy Control and Prices, VKEKK, testified in the International Centre for Settlement of Investment Disputes in Washington DC about pressure she has felt from President Dalia Grybauskaitė.

Korsakaitė testified that she had been pressured over Vilnius city heating tariffs set by Vilniaus Energija, an energy company operated in the Lithuanian capital as part of Veolia.

In her testimony, Korsakaitė admitted that, during her term as the VKEKK chairperson, President Grybauskaitė and her administration «constantly attempted» to «unfairly» manipulate the heating tariffs set for the claimant, Velia-Vilniaus Energija.

«The presidential administration along with the office of the prime minister made political pressure on the commission with the aim of nationalising the money saved by Vilniaus Energija,» Korsakaitė said in the testimony. news site broke the news last week.

Korsakaitė also confessed she feared a politically-motivated investigation against her by the Prosecutor General’s Office and the Financial Crimes Investigation Service (FNTT), which are seen by many as the satellites of the President‘s Office.

She also claimed that Lithuania’s law-enforcement institutions brought charges against affiliates of the Veolia group, although some VKEKK experts had notified the charges were unsubstantiated.

Veolia alleges it was ill-effected by unfair conduct of Lithuanian politicians and regulatory institutions.

In a statement, the company has explained it has resorted to international arbitration due to the «unwillingness» of the Lithuanian state to compensate the company after unfair and discriminatory changes in laws and regulations have resulted in extensive losses suffered by its fully-owned subsidiaries, Vilniaus Energija and Litesko.

«Veolia has been left with no other choice than to resort to international arbitration,» Malika Ghendouri, a Veolia executive, has said, adding, «This process is long and expensive and could harm the parties’ reputations, but it provides the best guarantee of neutrality and objectivity, which might not be available to the company in other forums.»

Meanwhile, officials from the Vilnius municipality and law-enforcement accuse Veolia of unlawful manipulation of energy prices, announcing ca a 200-million-euro claim against the concern

Following the testimony, which is seen as very detrimental to Lithuania in the lawsuit, President‘s press service released a statement this week saying that «the President’s Office does not comment on proceedings of courts or international arbitration institutions.»

«Arbitration (proceedings) are currently ongoing. This is a confidential, commercial dispute initiated by a privately-owned company, known in our country as Dalkia, over decisions taken in the Vilnius heating sector five years ago,» Mindaugas Lingė, the president’s chief domestic policy advisor, said on the Žinių Radijas radio station on Tuesday, September 12.

«The arbitration process is closed and any comment, public discussion may be treated as a violation of the process and may entail certain consequences,» he added.

According to the advisor, Grybauskaitė strived that district heating prices in Vilnius go down, but Diana Korsakaitė as the VKEKK chief failed to achieve this goal.

Commenting on the Korsakaitė testimony, Prime Minister Saulius Skvernelis told Žinių radijas he had felt pressure from different groups in the seat of Interior affairs minister. He says he believes the former VKEKK chief’s actions should have been «completely» different has she felt pressure.

«If you are a head of an independent state institution and the politicians attempt to wage pressure on you, you have to react immediately informing respective state institutions of that. Now it seems that Mrs Korsakaitė chose to represent not the state or the institution she has worked, but the opposite side, the claimant. I reckon the stance by her has nothing to do with finding the truth,» the PM emphasised.

Veolia’s Lithuanian units supply heat and electricity to more than 700,000 customers, according to its website. Vilniaus Energija signed a 15-year contract to operate the capital city’s heating grid in 2002 and had to turn the heating grid over to the government in April 2017.

Veolia claims it has allotted more than 200 million euros for the upgrade of Lithuania’s heating systems, making it the largest French investor in Lithuania, and it has increased use of cheap biofuels. The company insists the modernisation allows Vilnius’ combined heat and power plants to run more efficiently and suffer from malfunctioning less.

Lithuania‘s Investigation Service of Financial Crimes, FNTT, also launched criminal proceedings against former chiefs of Vilniaus Energija, alleging that unlawful manipulation of gas acquisition prices led to almost 3 million euros in damage for Vilniaus Energija, Litesko and heating consumers. Vilniaus Energija maintains the proceedings are based on misleading data and fiction.

With the local municipalities taking over heating from private suppliers, Veolia has had some major upsets in Lithuania lately, which reflect on the company’s economic indicators.

Last year, Vilniaus Energija (Vilnius Energy) saw its annual revenue fall to 151.058 million euros, down 11.5 percent from 170.746 million euros in 2015.

The company, whose 15-year lease on the Lithuanian capital’s heating system ended in April 2017, posted a net loss of 568,000 euros for 2016, compared with a net profit of 363,000 euros in 2015, according to its 2016 annual report filed with the Centre of Registers.

Veolia‘s another affiliates in Lithuania have also been struggling recently and go to court to defend their interests.

Amid an ongoing court dispute over an early cancellation of its lease of Alytus’ district heating system, Litesko, a subsidiary of France’s Veolia, plans to propose to transfer the assets back to the southern Lithuanian town in the spring of 2018, but it will demand 9 million euros in compensation for its investments.

Litesko and the Alytus local authority signed a 15-year contract on the lease of the town’s heating grid back in 2001. In 2005, the contract was extended for another ten years, from 2016 to 2026. Certain terms of the contract were revised two years later.

The Lithuanian Competition Council ruled in September of 2016 that the 10-year extension was unlawful. The Alytus administration then turned to court for an early termination of the contract and filed a claim for damages, worth 14.227 million euros, against Litesko for expensive heating supplies and for unused and sold emission allowances.

Ref: 020/

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  1. Zerry says:

    Energy business in Lithuania and Latvia is filled with bribery, corruption and envelopes. Seems that in Lithuania it’s gonna be a huge mess. Also taking into account that Lithuania is certainly not a friendly place for foreign business.

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