VILNIUS - Lithuania's government was poised to approve amendments to the law on nuclear energy creating a new state-controlled energy company, Leo LT, in what represents a major breakthrough in the country's ambition to build a new atomic power plant.
The amendments became necessary after the government reached an agreement with a privately owned grid operator, VST, to create the new company, which will act as a national investor in not only a new atomic power plant but also building grid links with countries such as Poland and Sweden.
Previously the state had wanted to merge VST, RST, another grid operator, and Lietuvos Energija, the state-owned utility, into the latter. A law on nuclear power passed by Parliament called for namely this scenario.
Prime Minister Gediminas Kirkilas earlier confirmed that the state would hold 61.7 percent of the stock in Leo LT, while NDX Energija, owner of VST, would own 38.3 percent.
Thus the deal signifies a victory for NDX Energija, a young firm that bought VST during its privatization in 2004 and that had criticized the government's merger proposal as risky.
NDX Energija's owners, who also own VP Market, the largest retail store and mall operator in the Baltics, instead proposed creating a separate umbrella company that would be 100 percent owned by the three main subsidiaries. This is Leo LT.
The distribution of shares in Leo LT (Lietuvos Elektros Organizacija) will ensure that the state has control over the management and decision-making of the merged utility.
Kirkilas warned that a rejection by Parliament would "mean that we will have neither the atomic power plant nor the energy bridges. We will wreck our own updated energy strategy."
Under the plan worked out between the Economy Minister and NDX Energija, Leo LT will build a new nuclear power plant 's the cost of which is uncertain but is likely to be at least 5 billion euros 's and energy links with Poland and Sweden by 2015 - 2018.
According to Lietuvos Rytas, the government will have seven seats on the supervisory council of Leo LT, while NDX Energija will have the right to nominate four members.
The government will appoint three members to the management board and NDX Energija will have two.
The draft shareholders agreement envisages that the government will have the possibility of increasing its stake in Leo LT to 67 percent and the right of first refusal if NDX Energija decides to sell its shares.
From 2015, no shareholder will be free to dispose of its shares in Leo LT.
Two power generating subsidiaries of Lietuvos Energija 's the Kruonis Hydro Pump Storage Plant and the Kaunas Hydro Power Plant 's will not be included into the capital of the new energy company and will remain exclusively in the state's hands.
Meanwhile, Darius Nedzinskas, CEO of NDX Energija, said there were plans to list up to 0.4 percent of Leo LT on the open market.
"There is a possibility to include a company with such a high capitalization into this list and make 0.1, 0.3 or 0.4 percent of its shares available for free float. We consider doing so as soon as the company is established in order to make the company completely public," he said.
The state currently holds a 96.4 percent stake in Lietuvos Energija and owns 71.34 percent of RST.
NDX Energija, in turn, has a 97.1 percent stake in VST.
Germany's E.ON Ruhrgas holds a stake of around 20 percent in RST and is the largest among minority shareholders of the three companies.