Observer "Lietuva"

WEEK 1.2006

Saturday, 7th of January

PM clashes with economy minister over gas tariff regulation issue
Algirdas Brazauskas, Social Democratic Lithuania's Prime Minister, has clashed with Labourite economy minister Kestutis Dauksys over the new version of the Natural Gas Law, which would set out the regulation of natural gas prices.
Following the Friday's meeting with representatives of the national energy sector, Brazauskas voiced his strong opposition to any idea to regulate natural gas prices. Meanwhile, the minister of economy pressed with the need to regulate the prices of natural gas.
The deliberations of amendments to the natural gas legislation, which should enable the companies to choose a supplier at least formally, have been going on for more than a year, dragged out by clashes amid interests of gas companies, heat suppliers and industrialists.
The Parliament has repeatedly sent the bill back to the government for reconsideration. The future of the projected gas storage project is unclear as well.
Lietuvos Rytas

Siemens arena attracts record numbers of visitors
31 events were organised in the most modern arena in the Baltic countries, Siemens arena, in October-December 2005. These events attracted 120 thousand spectators.
Vitalijus Vasiliauskas, director general of Siemens arena, says the most popular events were the farewell concert of Phil Collins that attracted 12.4 thousand people, a rock opera Love and Death in Verona (9,000 spectators) and a musical fairy-tale Snowhite and the Seven Dwarfs (9,000 spectators).
The universal arena was acknowledged the Sports Building of the Year in Lithuania in 2004. It will host the European men’s basketball championship in 2011. Siemens arena is the first segment of the developed Vilnius entertainment park. Rubicon Group has invested LTL 65 million in the arena construction.

Maintenance works at Lithuanian oil refinery
The Lithuanian oil refinery Mazeikiu Nafta (Mazeikiai Oil or MN) will be working at half capacity until mid January. Reports about repair works conducted in the refinery have caused worries whether the country will not feel the shortage of liquefied petroleum gas.
MN claims that it is carrying out scheduled maintenance works in the vacuum tower. Giedrius Karsokas, the company’s communications director, said all catalysts were in good working order and the scheduled work should be complete on January 13.
On Friday it was reported that MN reduced liquefied petroleum gas output significantly.
Previously the repair works in the oil refinery were conducted in April 2004: a catalyst was changed in two oil refinery equipment units.
Lietuvos Zinios

Friday, 6th of January

Internet banking becomes more popular
Relying on the data of Hansabankas, the number of users of the internet banking system has been growing lately; moreover, users’ activity has been increasing as well. At present, 40 percent of the internet bank services of Hansabankas use all the possibilities provided by the system.
Ramunas Strauka, director of the Product and Electronic Channel Department of Hansabankas, says this tendency has been preconditioned by an efficient advertising campaign and the changed pricing system: it is cheaper to make payments online than in a bank’s office.
Paulius Krisciunas, director of the Electronic Banking Department of SEB Vilnius Bank claims that similar tendencies are observed in Vilnius Bank as well.
Lithuanian commercial banks had 1.2 million internet banking service users in early October 2005, a 42 percent rise year-on-year and a 29.5 percent rise since the start of the year 2005.
With regard to the increasing number of active clients that already have experience of internet banking service usage, Hansabankas presents a new version of its internet banking system as of today. Representatives of Hansabankas do not indicate the cost of the new version‘s creation and implementation.
Verslo Zinios, Lietuvos Rytas, Respublika

Sanitas projects bigger consolidated net earnings
Sanitas, the largest Lithuania's pharmaceutical company controlled by the investment house Invalda, is projecting its consolidated net earnings to reach LTL 11.48 million with consolidated sales growing to 66.79 million litas in 2006.
Moreover, the performance forecasts as confirmed by Sanitas' supervisory council for 2006 reveal that the company's earnings before interest, tax, deterioration and amortization (EBITDA) are to reach LTL 17.82 million this year.
The pharmaceutical company posted LTL 5.74 million net profit for January-November 2005, up from LTL 5.14 million a year ago.
Verslo Zinios

Unemployment rate down in Lithuania
Lithuania's average annual unemployment rate was 4.8 percent last year, down from 6.9 percent in 2004, the Labour Exchange said.
The jobless rate reached 4.1 percent in December, up 0.2 percentage points from November but down 1.9 points from December 2004, when it was 6.0 percent.
Janina Gaizutyte, deputy director of the Labour Exchange, said that unemployment should continue to decline in 2006, noting that a survey of employers showed that the number of planned new jobs was six times higher than the number of planned layoffs.
The number of officially registered unemployed people was 87,200 as of January 1, an increase of 6.8 percent, or 5,600 jobless, from a month ago. Year-on-year, it declined by 31 percent or 39,200 jobless.
Lietuvos Rytas, Lietuvos Zinios, Respublika

Thursday, 5th of January

Concentration in retail market expected
Lithuanian retailers and retail trade specialist agree that the concentration in the retail trade market is unavoidable; however, they do not talk about the possible mergers.
The rumour that Rimi Baltic might take over Iki chain has been hovering since the end of the last year. Aidas Mackevicius, director general of UAB Palink, says this is just a rumour.
Antonio Soares, executive director of Rimi Baltic, says the chain is not focused on mergers at the moment. According to him, at present their focus falls on expansion of low-price stores Supernetto and Rimi Hypemarket in Lithuania.
Suppliers of the big trade centres do not conceal that the possible concentration of the biggest retail trade chains would be beneficial neither to them nor to consumers.
Verslo Zinios

LTL 150 million for exported products
Lithuanian processing companies received LTL 150 million in subsidies for exported agricultural products last year. Over LTL 1.6 million support funds allocated with accordance to EU market regulations means were paid to milk product producers.
The major part, more than LTL 70 million, of subsidies were paid for the exported sugar that was sold in the markets of Russia, Ukraine, Tajikistan, Uzbekistan.
Last year, the National Payment Agency issued 276 export licences for 22.7 thousand of various milk products to dairies.
Nearly 100,000 various products worth LTL 600 million were exported to foreign countries last year.
Respublika, Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios

Economic freedom index of Lithuania remains unchanged
While economic freedom improved significantly throughout North America and Europe in general, the situation in Lithuania remained unchanged and Estonia and Latvia posted sharp declines, according to the latest Index of Economic Freedom by the Heritage Foundation and the Wall Street Journal.
Lithuania remains in the group of "mostly free" countries, the Lithuanian Free Market Institute (LFMI) said on Wednesday.
The results of the study show that the level of economic freedom in Lithuania remained virtually unchanged: the country ranks 23rd in the 2006 index.
The overall score is higher because of improved score on the fiscal burden of government. The factors driving it down are vast bureaucracies and corruption, insufficient confidence in courts and price regulation.
Verslo Zinios, Lietuvos Rytas, Kauno Diena, Lietuvos Zinios

Wednesday, 4th of January

Biggest Lithuania’s companies
A single oil processing company in the Baltic countries, Mazeikiu Nafta (Mazeikiai Oil), controlled by the Russian oil concern Yukos, undergoing bankruptcy procedures at the moment, is the biggest Lithuanian company in terms of sales this year. Its turnover leaped 47 percent over nine months of the last year and stood at LTL 7.9 billion.
Based on the list of 400 biggest Lithuanian companies with regard to 9-month turnover, the new companies on the top ten list are a retailer Norfos Mazmena (LTL 739 million), Jonava nitrogenous fertilizer producer Achema (LTL 658 million) and the electricity supplier Rytu Skirstomieji Tinklai (Eastern Distribution Network) (LTL 610 million).
The second biggest company of Lithuania in terms of turnover was VP Market, its sales amounted to LTL 3.348 billion, a 24.2 percent rise year-on-year.
The Lithuanian mobile communications operator Omnitel (LTL 636 million) retained its position among top ten companies of Lithuania.
Lietuvos Zinios

Sugar quota exceeded in Lithuania
Lithuanian sugar factories produced 124.6 thousand tons of white sugar in 2005 and exceeded the national production quota.
Following the European Union‘s (EU) decision, the sugar production quota for Lithuania was reduced by 2.7 thousand tons, to 100.29 thousand tons. The reduced quota is valid from July 1, 2005 till June 30, 2006.
Last year was a good year for sugar beets in Lithuania. Processors purchased 745.9 thousand tons of sugar beets with the sugariness rate of 18.50 percent from farmers in 2005.

Funds from privatisation
Lithuania raised LTL 314.73 million in total privatization proceeds last year, down 23.3 percent from LTL 410.5 million it received in 2004, the State Property Fund (SPF) said.
The number of privatization transactions fell by 7.5 percent to 536 last year, down from 576 in the previous year.
The SPF concluded 206 transactions, worth LTL 137.29 million, for privatization of state-owned assets last year, down from 277 transactions, worth LTL 252 million, in 2004.
Last year's biggest privatization transaction was the sale of 100 percent of Lietuvos Avialinijos (Lithuanian Airlines), the country's largest air carrier, for LTL 25.78 million. In 2004, it was the sale of a 34 percent stake in Lietuvos Dujos (Lithuanian Gas), the natural gas utility, for LTL 100 million.
Kauno Diena, Lietuvos Rytas, Verslo Zinios

Tuesday, 3rd of January

Social tax
Profit of Lithuania’s companies will be additionally taxed for two years: as of January, a social tax stepped into force in the country. The social tax has replaced the road tax.
In line with the Temporal Social Tax law passed in the Seimas, a 4 percent tariff will be imposed on companies’ profit in 2006 and 3 percent – in 2007. Therefore the profit tax will amount to 19 percent in 2006 and 18 percent in 2007.
As of 2008, the current 15 percent profit tax will be applied.
The social tax has been introduced in order to compensate budget revenues that will shrink due to reduced residents’ income tax.

Lack of foreign investments
Hunger of foreign investments will continue torturing Lithuania, while local companies will tend to invest money in the neighbouring countries where labour is cheaper. The economic analysts who observe this tendency fear that the lack of investments will become the main hindrance of Lithuanian economical development. However for now increased consumers’ revenues will push the economy forward.
With regard to the attracted foreign investments, Lithuania lags behind many countries of the region, while the flow of direct foreign investments has reduced by 28 percent, to LTL 1.23 million, in 9 months of 2005, year-on-year.
The chief analyst of Nord/LB Lietuva bank Rimantas Rudzkis is surprised that the government does not plan more funds for attracting investments.
Relying on the data of the Bank of Lithuania, the investments of Lithuanian companies abroad amounted to LTL 2.72 billion in 9 months of the year, a 36.1 percent rise year-on-year. This tendency shows that the local market is becoming too small for Lithuanian companies and they look for expansion possibilities in other markets, on the other hand, they also tend to move production abroad and to close down factories in Lithuania.
Lietuvos Zinios

Alytaus Tekstile receives financial injection from state
A state-controlled manufacturer of cotton yarns and fabrics Alytaus Tekstile (Alytus Textile or AT) received LTL 5 million financial injection from the state in late December 2005 and has used all the money by now.
The marketing director of AT Saulius Poskus, who is also an acting director general of the company, says the money has been used to meet creditors’ demands and to purchase raw materials and other materials necessary for production.
During the first stage of LTL 7,543 million worth equity issue sale, only the Government acquired AT shares for LTL 5 million.
The second stock distribution stage started last Friday and will last for 15 days.
The biggest creditors of the company are SEB Vilniaus Bankas and Snoras bank.
Lietuvos Rytas

UAB Sanitex starts selling food products online
A wholesaler UAB Sanitex launched an electronic store a year ago. This year, the company starts selling food products online. Lithuanian retailers claim that if there is a demand for food products online, they will join the electronic trade as well.
Over a year, the electronic store of UAB Sanitex posted LTL 1 million turnover. Simona Balciuviene, director of the E-Commerce Department of Sanitex, says this is not the limit.
Last year, some 30 companies supplied electric household appliances to Sanitex e-store.
In January 2006 UAB Topo Centras will open an e-store as well.
Verslo Zinios

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