VILNIUS - Lithuania's government may consider hedging its deal with Poland's PKN Orlen against currency fluctuations in order to prevent a multi-million dollar loss. The Verslo Zinios business daily reported that conditional losses owing to currency fluctuations in the U.S. dollar, in which the purchase price was agreed upon, could reach 34 million litas (9.85 million euros), while on June 12 the profit could have amounted to some 20 million litas.
A 0.01 litas change in the U.S. dollar-litas rate changes the price of the Mazeikiu Nafta stake by approximately 8.5 million litas.
Kestutis Dauksys, acting economy minister who signed an agreement on the sale of 30.6 percent of Mazeikiu Nafta on June 9 (see story on Page 5), said that hedging against U.S. dollar fluctuations would be considered.
"These fluctuations could be hedged against, and we will consider that. The U.S. dollar might fall sharply. It could be hedged via the purchase of futures through international banks, which would generate certain costs. We need to assess whether we need to pay a certain amount so as to be hedged against fluctuations," said Dauksys.
The minister also noted that hedging against currency fluctuations would pose certain problems since it was not yet clear when the deal would be finalized. "[The deal] might happen after one month, two months or half a year," Dauksys said.
Taking into consideration the dollar's fall from May 19, when PKN Orlen signed the agreement on purchase and sale of Lithuania's shares in the sole Baltic oil refining and transportation complex, the price of the stake declined by 34 million litas (if compared with June 6).
However, on June 12 the value of shares rose by almost 20 million litas if estimated in accordance with that day's U.S. dollar-litas rate set by the Bank of Lithuania.
