The decision came in the wake of a month of scandal and political clamor in the Lithuanian capital.
Talks have been under way since late October to agree to a 15-year lease of Vilnius' centralized heating system.
Under the proposed deal Dalkia would assume control as early as this May, with total investments reaching over 950 million litas ($237.5 million).
The 15-year lease will cost Dalkia 2 million litas a year until 2005 and 2.5 million litas thereafter.
Under the agreement the company has promised to lower heating costs by 5 percent as well as spend 546 million litas on modernizing the antiquated system. Dalkia will also pay off some 80 million litas in debt accrued by Vilniaus Silumos Tinklai heating network, which is 95 percent owned by the Lithuanian state.
The main benefit for those connected to the centralized heating network will be the ability to control the heat in their particular building.
Under the management of VST the daily average temperature had to drop below 8 degrees Centigrade for three consecutive days before the heating was turned on throughout Vilnius and residents could not adjust the heating level.
According to Kestutis Gecas, head of public relations for Dalkia in Vilnius, Dalkia will spend 20 million litas installing a computerized thermostat in each building.
"There will be a device which emits radio impulses from a computer in your building. This will tell the company how much heat you are receiving, and we can adjust it accordingly," explained Gecas. Installing such a system will cost between 600 litas and 800 litas per apartment, he added.
Dalkia intends to deliver hot water directly from heating stations to apartments instead of routing it through a distribution center - a task which will require major reworking and in many cases replacement of Vilnius' old piping system.
Gecas pointed out that while Dalkia generates 90 percent to 95 percent of its heat using natural gas, a clause in the agreement allows the company to build an oil-fired power plant if natural gas prices increase past a certain level.
As with any foreign takeover in Lithuania nothing can be done without scandal and political wrangling.
On Nov. 28 Vilnius Mayor Arturas Zuokas held a press conference where he played for reporters a tape made by Dalkia which he alleged proved there had been foul play on the part of some Lithuanian National Progress Party members including MP Egidijus Klumbys.
Earlier that day Klumbys announced he would initiate a parliamentary resolution to stop any deal with Dalkia.Zuokas also claimed he had evidence that associates of Klumbys had been offered 500,000 litas to get Dalkia out of Vilnius.
On Jan. 8, only a day before the vote was to take place, some parliamentary members in the Conservative Party asked that it be delayed. The voting had already been postponed once when the prosecutor general's office declared some aspects of the agreement in violation of current laws.
According to Conservative MP Andrius Kubilius, whose party is part of the ruling coalition at the City Council, it was a case of not enough information on the leadership's part. "The leadership was concerned about consumer protection rights, but after we sat down and had a detailed debate about the matter with Dalkia and the (Vilnius) municipality we were in favor of the agreement."
President of Lithuania Valdas Adamkus also entered the fray on Jan. 8 after meeting Vilnius Vice Mayor Algimantas Vakarinas and Economy Minister Petras Cesna.
Violeta Gaizauskaite, the presidential spokeswoman, told reporters afterward that the president was worried about the future of the Vilnius thermal power station, especially after the closure of the Ignalia nuclear plant. "The president didn't get clear answers to all his questions," said Gaizauskaite.
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