VILNIUS - In spite of government assurances late this summer that talks with Russia's Gazprom on the sale of Lietuvos Dujos (Lithuanian Gas), the state gas provider, would soon be completed, speculation has arisen that the negotiations may last well into next year.
A breakthrough came in late August as consultants BNP Paribas announced that the provisional deal for a 34 percent stake in Lietuvos Dujos would meet the government's criteria for sale, but the Lietuvos Rytas daily reported on Nov. 11 that sources close to the deal did not expect it to be finalized until early 2004.
Both sides have been dragging their feet since last spring, when Gazprom, the sole applicant that fulfilled the government's criteria for bidders, offered 80 million litas (23.1 million euros) for the stake - 40 million litas less than the government's asking price.
In the ensuing months, both parties have undergone scrupulous negotiations that have left agreements on certain conditions - investment, price controls for gas and import quotas - unresolved.
Lietuvos Rytas supported its claim by pointing to an agreement made by Lithuanian gas importer Dujotekana to import 1.8 billion cubic meters of natural gas in 2004, a figure three times greater than what would be allowed under the tentative agreement between the government and Gazprom.
In spite of these reports, officials responsible for the privatization remain optimistic about the prospect of completing negotiations before Dec. 31 or even earlier.
"Negotiations have entered the final stage. We will be finished in the nearest future, perhaps even next week," said Saulius Specius, the prime minister's adviser responsible for the privatization.
Officials from the State Property Fund, the government's broker for the deal, were equally enthusiastic.
"We have one and a half months left until the end of the year. That's plenty of time to finish," said Antanas Malikenas, privatization director at the State Property Fund.
When asked about the newspaper report, Malikenas was skeptical.
"That's the opinion of a journalist. I'm also entitled to have an opinion, and my opinion is that the negotiations will be done by the end of the year," he said.
Still, Malikenas admitted that there was a lengthy list of conditions-including gas tariffs, stockholder technicalities and the final price for the stake-still to be decided between the government and Gazprom.
According to analysts, the government has a concrete financial interest in the current foot-dragging.
"Above all, we have to acknowledge that whoever is in control of the company at the end of the year will receive dividends from the profits, which in 2003 will not be small. If the deal goes through, the buyer will control the company and receive the dividends. If not, the government receives them," said Remigijus Simasius of the Lithuanian Free Market Institute.
Government representatives did not deny this claim. "To be honest, receipts from the dividends have already been included in this year's budget," Specius admitted.
Another reason cited for the delay could be the possible Lithuanian reluctance toward Russian petroleum in the wake of the arrest of Mikhail Khodorovsky, former president of the besieged Russian oil major Yukos.
"Capital from Russian companies does not meet the criteria set forth in the government's policy of trans-Atlantic integration-it is impossible to ignore this factor," Simasius said.
"We understand the reality of the situation, therefore we always pay special attention where Russian oil is concerned. But in terms of this deal, I can tell you that what recently happened [with Khodorovsky] has no influence," Specius said.
Lietuvos Dujos is currently 34 percent owned by a consortium consisting of the German companies Ruhrgas and E.ON, which paid 116 million litas for their part of the company in 2002. The government plans to retain control of a 24 percent stake, with individual shareholders keeping the remaining portion.
