EBRD head lavishes praise on Lithuanian economic reforms

VILNIUS - Lithuania's economy is rapidly moving in the right direction, EBRD President Jean Lemierre said on Sept. 11 on the first day of a week-long tour of the Baltic countries.

He said that was why the European Bank for Reconstruction and Development was stepping up investments in support of Lithuania's private sector and supporting key reforms that the government has been implementing with an eye to European Union accession.

Lemierre's visit to Lithuania, Latvia and Estonia will last through Sept. 14 and includes meetings with top government officials and business leaders. The EBRD has invested over a billion euros in the Baltic states through nearly 100 projects.

"What is being done in Lithuania is sound and good," Lemierre told journalists after a ribbon-cutting ceremony to open the new EBRD office in Vilnius.

"The economy of the country is moving forward very fast, and we shall be proud to support what Lithuania is doing to prepare its future in the EU," he said.

Lithuanian Finance Minister Dalia Grybauskaite, also on hand, noted the EBRD was now financing or preparing to finance the bulk of Lithuania's "strategic objects." It has committed 400 million euros ($357.15 million) to 28 projects in the country and is managing an international donor fund to support the decommissioning of the Ignalina nuclear power plant.

Grybauskaite said that among upcoming major projects with the bank include a $54 million loan to improve Lithuania's railway system and investments to support the reconstruction of the Mazeikiu Nafta oil complex. The EBRD is also considering support for the reorganization of the electricity utility Lietuvos Energija, the construction of power lines linking Lithuania via Poland into the European power grid and a highway between Vilnius and Warsaw.

Lemierre noted that the energy sector was crucial for Lithuania, and a pending investment by the Russian oil firm Yukos at Mazeikiu Nafta represented great progress. "The refinery is a key asset in the Lithuanian economy, but it has no value without a long-term agreement with a crude oil supplier," Lemierre said. "We understand this condition is met by the deal with Yukos, and the bank is committed to do what it can to support the refinery as soon as that deal is concluded, and we are given a (detailed) business plan."

Both Lemierre and Grybauskaite lamented the recently announced delay in signing the agreement between Yukos, the U.S. energy group Williams – Mazeikiu Nafta's strategic investor and operator – and the Lithuanian government.

The deal was to have been finalized in September but has now been pushed forward to late October. "We hope the delay is only for technical reasons, and that the agreement will be completed quickly so we can go forward," Lemierre said.

He refused to speculate on the size of possible EBRD investments at Mazeikiu Nafta, saying only that "a big amount of money" was being discussed, including both equity and loans.