State owned assets counted

  • 2010-07-21
  • By Rokas M. Tracevskis

VILNIUS - The management posts of state-owned enterprises in Lithuania used to be a comfortable sanatorium for people closely related with the establishment of Lithuanian political parties. The fact that a state-owned company made no profit was understood by the country’s government as a natural medical fact. However, the economic crisis forced the Lithuanian government to make a total estimation of its assets and to think about more effective use of them, as well as for possible further privatization. Until now, only government ministries had such valuations of the state-owned enterprises in their activity-related economy areas. Now it appears that the Lithuanian government and therefore, the taxpayers of Lithuania, is the largest owner of commercial assets in the country. Each taxpayer in this country has a share in this portfolio, worth around 16,000 litas (4,634 euros) per person.

The portfolio of state-owned enterprises consists of more than 300 companies in various sectors. Companies in the energy, real estate and forest sectors represent more than 80 percent of the value of the portfolio. The government also has a number of strategically important assets in the transportation sector.

The value of Lithuanian state-owned enterprises is 18 billion litas. This equals 25 percent of the country’s GDP. According to a press conference by Economy Minister Dainius Kreivys on July 14, until now the state-owned assets were managed extremely ineffectively. In 2009, the return in dividends from the state-owned assets was just 45 million litas. “Such assets would bring in revenue of 1.5 billion litas for a state like in Sweden,” Kreivys said, stating that the Scandinavian experience in managing state-owned enterprises should be transferred to Lithuania.

On July 14, the Economy Ministry presented the first ever Annual Review on state-owned enterprises. The ministry suggests considering partial or total privatization of Vilnius and Kaunas airports and the Lithuanian Shipping Company. The report also states that the cargo transportation-related activity of the Lithuanian Railways, as well as some of Klaipeda port’s activities, could also include private business. No privatization is planned for Lithuanian Post and the Klaipedos Nafta oil terminal. Lithuanian Post’s financial situation is in poor shape while Klaipedos Nafta is important for Lithuania’s energy security.

“Private capital could bring its good practice,” Prime Minister Andrius Kubilius said during his press conference on July 14, stating that the management of state-owned enterprises in Scandinavia should be an example for Lithuania. He also said that the invitation for private capital to take over Lithuanian state-owned companies is not an issue of the very near future. “Not tomorrow,” Kubilius said.