Kaunas talks tough in negotiations with France's Dalkia

VILNIUS (BNS) - Dalkia, Europe's largest private heating company, has said it remains committed to investing in the heating sector in Kauanas.

In a letter to the municipality of Kaunas, Andreas Greimas, head of Dalkia's negotiating team, said the French company agreed to negotiate on the basis of its original offer submitted for a tender held in 1999, taking into consideration amendments requested by the city's officials.

"Although the old offer today does not correspond to the needs of Kauno Energija, we accept the rules proposed by the [city's] negotiating commission and agree to continue talks [on the contract to operate the company]," Andrius Janukonis, Dalkia's representative in Lithuania, said July28.

The city has set a deadline of Aug. 4 to decide whether or not to continue the negotiations. With Kaunas mayor Vytautas Sustauskas sufferring minor heart problems, the city's vice-mayor Erikas Tamasauskas has assumed leadership in the discussions.

"It is time to stop the practise of running down state-owned companies and then handing them over to foreigners almost for free," he said at a July 31 press conference.

Tamasauskas has not hesitated to take a tough stance in the negotiations, and they have been on the verge of breaking off several times in recent days. Dalkia's Janukonis has angrily accused the city of dragging its feet in the talks, but Tamasauskas has proclaimed he is just being cautious and compared the privatization of Kauno Energija with US company Williams' involvement with Mazeikiu Nafta.

"Until now the predominant viewpoint has been that troubled companies can be rescued only by foreigners. An inferiority complex has appeared [in Lithuania] . Lithuania's independence has lost its meaning. Independence has to be a means for Lithuanians to live better," he said in an interview with Kaunas daily Kauno Diena. Tamasauskas said he is not against foreigners and foreign investment. He just wants to see fairness in the negotiations.

"During the first years of independence, a lot of crooks appeared in Lithuania. We all know this. Investors' honesty needs to be scrutinized on an individual basis," he said.

Last year Dalkia proposed setting a heating tariff of 10.44 Lithuanian centas ($ 0.0261) per kWh for consumers in Kaunas. After assessing the current financial situation at Kauno Energija, Dalkia now wants the tariff to be fixed at 11.8 centas per kWh and has not agreed to fully cover the liabilities of the ailing municipal company.

Kauno Energija lost 129 million litas ($32,250,000) over the past 28 months, according to an audit by Arthur Andersen.

Dalkia, the runner-up in the tender, was invited for talks in June this year after negotiations with the Swedish company Vattenfall, the original winner of the tender, fell through.

Dalkia has come up with new proposals, but the city authorities have recently asked the French company to present its original offer with some adjustments.