Eesti Energia ready to trade kilowatts on Lithuanian market

  • 2007-02-28
  • By TBT staff
VILNIUS - Lithuania's energy market continued its dynamism last week, as Estonia set up a subsidiary trading firm and a report surfaced that the government was mulling over the creation of an energy alliance to finance a new nuclear power plant. Eesti Energia (Estonian Energy) announced on Feb. 20 that it has created a subsidiary, Lumen Balticum, to buy and sell kilowatts on the deregulated Lithuanian market.

As CEO Sandor Liive said in a statement, "The energy market in Lithuania has been liberalized since 2002 and is open to all power suppliers. It is an opportunity for Estonian Energy to deliver one of its strategic goals of developing new products, markets and connections."
Last year Estonian Energy launched a subsidiary energy trader in Latvia (E.Energy) and in Jordan (Oil Shale Energy).
Lumen Balticum, which is fully owned by Estonian Energy, will initially sell power to large, corporate customers, the company said in a press release.

Liive stressed the growing cooperation between the Baltic states in the energy sphere as one of the reasons behind the decision. "Estonian Energy is a partner for Lithuania in several key energy projects," he said. "I am sure that our Lithuanian subsidiary will enhance regional cooperation and foster consolidation in the energy sector."
To be sure, there was a time when relations between the Estonian utility and Lithuania were frosty. Three years ago the government of Algirdas Brazauskas suddenly excluded Estonian Energy in the privatization of the western power grid (VST) despite the company's favorable bid. The future ownership of the Estonian firm, government officials said, was not sufficiently clear enough to warrant allowing it to buy Lithuania's western grid system.

Estonian Energy, which had spent large sums of money on the bid, had considered taking the government to court.
As a statement issued by the company last week said, "Cooperation between the energy companies would ensure sufficient investment in the energy sector as well as enable exports of power to other markets."
Meanwhile, local media reported the government was considering the establishment of an energy alliance that would assist in raising funds for the multi-billion euro nuclear power project.
According to the Verslo Zinios daily, the alliance would include Lietuvos Energija (Lithuanian Energy), RST (the eastern power grid) and VST. This group, cooperating together, could serve as the main Lithuanian investor in the new atomic plant, which could cost some 2.5 's 4 billion euros.

The Baltic states and Poland have announced their intention to build a new nuclear plant in Lithuania by 2015 in order to replace the existing one in Ignalina, which will be decommissioned as of 2009.
Last week the government announced that it would likely sign a political agreement with Poland on construction of the plant. For now there has been only a memorandum of understanding, and a political agreement would seal Poland's participation in the deal.