Consensus reached on gas giant sell-off

VILNIUS - Lithuania's parliamentary parties agreed on June 27 on a model for selling Lietuvos Dujos, the state-owned gas utility. Lithuanian firms connected to Russia's Gazprom have expressed anger at not having had a chance to take part in this privatization.

Acting Prime Minister Eugenijus Gentvilas of the Liberals, Social Democrat Algirdas Brazauskas, Social Liberal Arturas Paulauskas, Conservative Andrius Kubilius, Christian Democrat Kazys Bobelis and leaders of other parties reflected the current atmosphere of consensus between parties of different political colors by meeting to decide on the privatization model.

Gentvilas initiated the gathering. He said that party leaders were "representing 139 MPs" out of a total 141. Only the Modern Conservative MP Gediminas Vagnorius and Young Lithuanians' Stanislovas Buskevicius were not represented.

Brazauskas proposed a plan which was accepted after some discussion. Party leaders said that the state should retain 34 percent of shares in Lietuvos Dujos after the natural-gas company's privatization.

It was also decided to offer 34 percent of shares in the company to a strategic investor. Lithuanian laws require that a strategic investor in key state enterprises should be a "Western investor."

This means a company from a NATO or European Union member state or candidate country, which excludes Russia.

Some 24 percent is to go to a gas supplier. At the moment, the only possible supplier is Russia's Gazprom. Separate tenders for the 34 percent and 24 percent stakes are to be announced simultaneously.

Some 8 percent is already owned by small shareholders, mostly employees.

Decisions as to who will take operational control of Lietuvos Dujos after the privatization rests with the company's new managers. The Liberals had plans to give operational control to the strategic investor.

"A strict division of functions is not very advantageous, nor is it always justified. The board itself decides who will operate this economic entity," Brazauskas said after the meeting in the joint briefing together with Gentvilas.

Ruhrgas (Germany), Gaz de France (France), RWE (Germany), Distrigas (Belgium) and Fortum (Finland) have expressed interest in the privatization of Lietuvos Dujos.

"The privatization of Lietuvos Dujos will be finished around New Year," Gentvilas said.

"No, it will certainly be finished this year," Brazauskas replied.

The Liberal/Social Liberal government had planned to sell 75 percent of shares in Lietuvos Dujos, leaving only a 17 percent stake in state hands. The initial plan of the outgoing Liberal/Social Liberal coalition was to sell 75 percent to a Western consortium, Gazprom and Gazprom's Lithuanian import partners.

"It would be good to give some part to Lithuanian capital, but there are no such laws that would make it possible," Gentvilas said.

Brazauskas again replied. "Lithuanians can take part in the Western consortium which will buy 34 percent of shares," he said.

The agreement provoked negative reactions from Antanas Bosas and Viktor Uspaskich.

Bosas is head of the Western Industry and Finances Corporation (a powerful Lithuanian business organization), leader of Klaipeda's Social Liberals and shareholder in Gazprom's importers Stella Vitae and Itera Lietuva. Uspaskich is a member of the Social Liberal parliamentary faction and a former shareholder of Itera Lietuva.

"We and Gazprom are not interested anymore in the privatization of Lietuvos Dujos," Bosas told LNK TV.

"It's pure corruption," echoed Uspaskich in another LNK interview. Uspaskich went on to doubt publicly the leftists' faithfulness to NATO and the European Union. He signed an appeal from right-wing MPs calling for the creation of a parliamentary commission to observe Brazauskas' approach on those issues.

The June 29 issue of Lietuvos Rytas included an article in which Gentvilas hinted that Uspakich made him a flattering offer for the possibility of buying 51 percent of Lietuvos Dujos for 200 million litas ($50 million).

"It was a talk about the possibility to make my life financially independent, but I can't call it a bribe," Gentvilas said.

The German gas giant Ruhrgas agreed to participate in the privatization of Lietuvos Dujos, even if Lithuania offers to sell a 34 percent stake to a strategic investor without giving operational control of the natural gas company.

Burckhard Bergman, chairman of the board of Ruhrgas, confirmed that the German group remained interested in participating in the sell-off process during talks with Gentvilas in Vienna on July 2.