VILNIUS - A leading daily reported that Lithuania might have to compensate Estonia's Eesti Energia for its participation in the cancelled privatization of Rytu Skirstomieji Tinklai, the eastern half of the country's national power grid.
Prime Minister Algirdas Brazauskas meanwhile reiterated his opinion that Lithuania should not privatize the grid until a free electricity market develops in the Baltic countries.
"We could return to the issue of privatization of Rytu Skirstomieji Tinklai after our neighbors - Estonia and Latvia - restructure their energy system management and set up institutions, either private or public, which would join a common Baltic market for sale of electricity on an equal basis," Brazauskas told Parliament on Feb. 12.
Eesti Energia, Estonia's state-owned utility, is the only bidder for RST, which was put on hold in December after a German bidder backed out of the process. The Estonian company bid 520 million litas (150 million euros) for a 71.35 percent stake in the Lithuanian grid.
By contrast the sale of Vakaru Skirstomieji Tinklai, the western half of the Lithuanian power grid, was successful, with the VP Group buying a 77 percent stake for 540 million litas.
"We believe that it makes no sense for Lithuania to privatize RST by selling the Estonians a stake in the company. Neither Estonians nor Latvians are ready to form a free electricity market on a basis beneficial to all three Baltic countries," Brazauskas said.
Not everyone has agreed with the prime minister. According to Vidmantas Jankauskas, chairman of the National Control Commission for Prices and Energy, the argument that Eesti Energia is state-run is not a good enough reason to reject it.
"The ratings of this Estonian company are high, it is reliable. Furthermore, we really have to expand cooperation in the energy sector within the boundaries of the Baltic countries," Jankauskas noted.
He pointed out that ambition and pride were the real reason, as the neighboring Baltic country was much smaller than Lithuania both in terms of population and territory.
In January the Economy Ministry asked the ministries of Finance and Justice, as well as the State Property Fund to assess the privatization of RST and to submit their recommendations. The privatization could be wrapped up by the end of this year, but Economy Minister Petras Cesna refused to forecast the outcome.
The government has reportedly scheduled the revenues from RST's privatization in the first quarter of 2004.
Eesti Energia is naturally claiming compensation for the costs of participating in the tender, and on Feb. 12 the Lietuvos Rytas daily reported that the compensation could amount to 15.4 million kroons (987,000 euros).
Brazauskas told Parliament that if a court did award the Estonian company compensations, the government would not use budget funds to make the payment.