Brazauskas government pushes for budget-lucrative privatization

  • 2001-07-26
  • Virgilijus Savickas
VILNIUS - Lithuanian Prime Minister Algirdas Brazauskas fielded questions on sore domestic issues such as economic growth, loans, privatization and the closure of the second block at the Ignalina nuclear power plant during a press conference July 23.

"The current growth of Lithuania's economy, which averages 4.4 percent per quarter, is too small. This is not enough. Estonia and Latvia are doing better. Our GNP should be growing at a 5 to 7 percent rate," Brazauskas said.

National finances are in deplorable shape, he said. As of May 31 the total state debt amounted to 13.12 billion litas ($3.28 billion), according to a press release from the Ministry of Finance. Direct state liabilities amounted to 10.89 billion litas, or 83.1 percent of the total debt, while contingent liabilities (state guarantees) were 2.23 billion litas or 16.9 percent of the total debt.

The total domestic debt at the end of May was 2.95 billion litas, or 22.5 percent of the total state debt.

Despite the debt figures Brazauskas said that his government would keep to former government liabilities.

A pending government money maker is the privatization of Lietuvos Dujos, the state-owned gas company. The government owns 92 percent of company shares.

There is an informal, all-parliamentary-party agreement initiated by liberal Eugenijus Gentvilas, the former acting prime minister, to leave 34 percent of the company's stock in state hands. But, according to Brazauskas, no decision has been taken yet as the government is still to confer on this question.

Brazauskas confirmed that the Social Liberals have proposed to form a consortium. An alternative is to hold separate auctions for gas suppliers and capital investors. He denied the assumption that Lietuvos Dujos privatization may be stranded by any businessman or group of interested persons.

"We are not going to sign another contract that's harmful to the state, so government specialists should carefully study the case of Lietuvos Dujos," Brazauskas said.

As most privatization contracts of the former Conservative and Liberal governments received a critical approach from the Social Democrats, who in public constantly labeled the privatization of Lietuvos Telekomas and Mazeikiu Nafta as detrimental to the state, Brazauskas emphasized that all future privatization will be based solely on economic criteria.

Asked by The Baltic Times what in his opinion a state property sell-off contract should look like in order for it not to be vulnerable to accusations of being harmful to Lithuania's national interests, he said: "The one and only criterion will be the revenue received by the state budget. First, the contract will be useful to Lithuania. The state will get money. Big money. As much as is possible. Second, the privatized company will operate effectively without incurring losses. In addition, the contract gives the state the possibility to retain certain amount of control."

Lietuvos Telekomas, where the signed contract grants the state no authority to influence the company's decision making on tariffs, is an example of adverse privatization, according to Brazauskas.

Brazauskas told the press conference he has no doubts that the closure of the Ignalina nuclear power plant will come up in talks with European Commission members in Brussels and he is ready to present his case.

"We have to begin negotiations with the EU on Ignalina this year. We have to build a negotiating delegation of competent, resolute, forward-looking people who understand well the energy production market," he said.

Asked for his position on closing the Ignalina nuclear power plant, Brazauskas said "that's a negotiating matter."

"This isn't just a local matter, it's a regional problem, with the power plant itself close to the border with Latvia," Brazauskas pointed out.

He said there were estimates that closure of the plant would cost about a billion euros, but that there was not a calculation of the social consequences of the closure.

"We can't leave the entire city of Visaginas unemployed. This problem has to be addressed and solved," Brazauskas said, adding that problems remained in long-term storage of nuclear waste products and modernization of the Lithuanian energy production system.