TALLINN-VILNIUS - Eesti Energia, Estonia's state-run utility, has squared off with European electricity giant E.ON Energie in a bid to take control over one of Lithuania's power grids in a major upcoming privatization.
According to reports, Eesti Energia has submitted a bid for the 77 percent stake in Rytu Skirstomieji Tinklai (Eastern Power Grid), which supplies electricity to the regions of Vilnius, Panevezys and Alytus.
The Lithuanian Privatization Agency is demanding a minimum 421 million litas (122 million euros) for the stake, and since Eesti Energia is forbidden by Estonian law to use costumer income for the acquisition, the company announced Nov. 7 that it had found finance from a consortium of Lithuanian banks, calling the facility the largest-ever loan in the Baltics without a state guarantee.
Though the company declined to name the banks, the Baltic News Service reported that Vilniaus Bankas, Vereins- und Westbank, Sampo Bankas and Hansabankas are all party to the consortium.
Darius Nedzinksas, chairman of Hansabankas, confirmed to BNS the bank's intention to provide financing for the Estonian utility.
Eesti Energia, which is under pressure to diversify its production resources over the next decade and a half (see story on this page), is also looking at the Lithuanian grid as a viable business opportunity.
Sandor Liive, a member of the utility's board, said the investment was strategic and that the company wanted to expand its client base and the market for its Narva-based power plants.
It is expected that Lithuania will become a net importer of kilowatts once the country shuts down the Ignalina nuclear power facility.
But the competition for RST will be tough. With 21 million costumers, Munich-based E.ON Energie is one of Europe's largest suppliers of electricity. Last year it posted sales of 19 billion euros.
Last summer E.ON Energie CEO Heinz-Peter Schierenbeck stated that the company wanted to become a strategic investor in Lithuania's power market. Already it has a major presence in the Baltic country, especially after its 22.1 million euro share swap with four Lithuanian energy companies.
As a result of the swap E.ON Energie owns 20.28 percent in RST and 14.62 in Vakaru Skirstomieji Tinklai (Western Power Grid), Lithuania's other major grid.
"Our future goal is to become a strategic investor in this area - a goal that we have achieved in Lietuvos Dujos (Lithuanian Gas) together with Ruhrgas," Schierenbeck said last summer.
E.ON Energie and Ruhrgas purchased a 34 percent stake in Lietuvos Dujos earlier this year.
Now that Poland's Polskie Sieci Elektroenergetyczne has dropped out of the RST privatization, Eesti Energia and E.ON Energie are the only two bidders.
Two bidders - Lithuania's Achema Group and a consortium led by Vilniaus Prekyba - have materialized in the tender for VST, which covers the regions of Kaunas, Kleipeda and Siauliai.