A more efficient Lietuvos Energija?

  • 1999-10-07
  • By Paul Beckman
VILNIUS - Lietuvos Energija, the state-owned power company, and the
word "debt" have made so many appearances together in the press over
the past year that the two terms are nearly synonymous.

But now the boss of the power company says that will change. Lietuvos
Energija plans to restructure itself, collect debts and pay off the
money it owes.

Bronius Cicenas has been the head of Lietuvos Energija only since
July. And while he admits getting the company on a more efficient
track will be tough, Cicenas said the company is now moving in the
right direction.

Cicenas told reporters that Lietuvos Energija owed a total of 900
million litas ($225 million) to various creditors and clients when he
first took the helm. Of that, 346.2 million litas were owed to the
Ignalina nuclear power plant. This debt has since been reduced by 62
million litas. Another 227.2 million litas were owed to banks. The
company has paid off 150 million litas already and plans to pay off
about 80 million litas by year's end.

The government's spending cuts seem to becoming a chic thing to do.
Cicenas said Lietuvos Energija also has a plan to reduce expenditures
by 62.5 million litas by year's end.

"Belts are really being tightened. In the administration, for
example, two deputy director positions have been cut. Now we have
four. Limits have been put on transportation and gasoline use. We've
cut down on the number of vehicles we use by seven. It's possible we
will need to sell them," said Cicenas.

He also suggested tariffs for electricity should be raised. If not,
Lietuvos Energija will wind up needing to borrow 800 million litas.

"From 1995, tariffs for electric energy have not changed. If we don't
raise them, we will need to borrow 800 million litas. In Lithuania,
there isn't one bank that would lend us that money because next year
we should pay back 485 million litas in loans. Foreign banks are not
an option because they would require us to raise tariffs and
restructure the company," said Cicenas.

But the debt works both ways. Individual users and Lithuanian
industries also owe money to Lietuvos Energija.

The local press, however, has shown more interest in LE's struggle to
collect debts - especially from Belarus. Lithuania's neighbor had
managed to rack up about a $100 million debt earlier this year for
electrical imports from Lithuania. Squeezing money out of Belarus has
proven so difficult that failure to do so cost Cicenas' predecessor
his job. Currently, electrical exports to Belarus have been halted.

Because Belarus is so cash-strapped, some of the debt is settled with
products. An intermediary company called Baltic Shem takes the
products from Belarus and tries to peddle them off to pay LE with

But Cicenas said the long struggle with Belarus is finally beginning
to pay off. By October 1, he said the Belarus' power company
Belenergo and Baltic Shem owed a total of 323.8 million litas - or
43.8 million litas less than was owed two months earlier.

Still, the Lithuanian negotiating team is not expecting an easy time
collecting it all. Since the beginning of September, it has been
trying to set a payment timetable with Belarus, but delays have
pushed back the agreement.

"[At the end of September], I was at the intergovernmental meeting in
Grodno, Belarus. Of the 13 topics we discussed, one was the debt
situation. Twelve topics went by as easy as putting butter on bread.
The debt situation, however, required long discussions," said
Gediminas Rainys, head of the state negotiating team.

Now an agreement about the payment schedule is expected at the
beginning of October.