Japanese investment project put on hold

  • 2004-12-15
  • Baltic News Service
VILNIUS - Japanese investors may postpone plans to build a new chemical plant in Kaunas, the largest investment in Lithuania since the restoration of independence, amid delays in Brussels' approval of regulations on trading emission quota.
The Kauno Diena daily reported last week that Japanese investors have suspended their plans until the European Commission approves the regulations that would authorize third countries to sell Lithuania's emission quota units.

The investors, who had proposed to build a 1 billion litas (290 million euro) bioethanol plant, have requested export subsidies and barriers for imports of cheaper products. They also said that they would buy emission quota units from Lithuania in a drive to meet Kyoto Protocol requirements.

Toshimori Tujita, an authorized representative of the Japanese government and the Mitsui Engineering corporation, was to arrive this week to coordinate final elements of the investment project and perhaps the signing of the letters of intent. The trip, however, had been called off, Gediminas Petrauskas, a member of the Kaunas City Council and chairman of Kauno Nova, a company in charge of arrangement of Kaunas investment projects, said.

"We are not ready to answer the Japanese businessmen's questions of concern. I would like to point out that the blame is not ours but the European Commission's, which has been postponing the approval of the directives required to implement the project," Petrauskas said.

The protocol is scheduled to come into effect in February 2005, but the European Commission is still considering the terms and conditions for trade in emission quota units for member states.

"Major industrial powers, including Germany and the U.K., are pushing for more favorable trading terms inside the community and want to establish various restrictions on trade between third countries," said Vytautas Krusinskas, head of the atmosphere division of the Environment Ministry.

Planned investments in the plant amount to some 1 billion litas over a five-year period. The government was expected to approve investments of some 550 million litas into the first stage of the project, which was to be launched early in 2005 and finalized by mid-2006.

The annual capacities of new plant are estimated at some 130,000 tons of ethanol, which exceeds the combined current capacities of domestic plants threefold.