Lithuania Business News: Archive 2003-
Saturday, 21st of March
Did not buy out the shares of Mazeikiai Oil
The put option deal between Lithuania's government and Poland's oil concern PKN Orlen on the buyout of an almost 10-percent stake in Mazeikiu Nafta (Mazeikiai Oil), the sole Baltic oil refinery, has not been implemented in due time on Friday and, contrary than expected, the government has not received approximately LTL 730 million. "We are waiting for information from PKN Orlen about the fulfilment of their obligations. The government spares no efforts so as to ensure that PKN Orlen meets its obligations as per option agreement. And that is all we could say today," Economy Minister Dainius Kreivys told the reporters on Friday. Any detailed comments would affect the talks, he added.
Lietuvos Zinios, Lietuvos Rytas, Respublika
Searches for electricity
With the shutdown of Ignalina Nuclear Power Plant (INPP) approaching, Lithuania has not yet signed any long-term contracts on the purchase of electricity after the closure of the nuclear facility at the end of this year. "We have not yet signed any long-term contracts either with Inter RAO or its subsidiary in Lithuania. We are now holding talks and we are negotiating with various partners, looking for the best options so as to ensure the supply both now and after the closure of Ignalina nuclear plant," Darius Masionis, chairman and CEO of Lithuania's power utility Lietuvos Energija (Lithuanian Energy), said during a news conference on Friday. There was still much time remaining till the shutdown of INPP, he noted. Early in March, Russia's Inter RAO confirmed that it would supply to Lithuania some 7 billion kWh of electricity from Russia and Belarus per year via its Lithuanian subsidiary. Until now Lithuania, if required, has been mostly importing electricity from Russia, to a lesser extent - from Latvia and Estonia.
Lietuvos Zinios, Lietuvos Rytas
A bite of billions for Lithuania
Lithuania, Latvia and Sweden will be able to carry out an underwater electricity link project to which the European Union is allocating EUR 175 million, the Lithuanian government's press office said in a press release on Friday. "We welcome this decision not only because it will help us to accelerate the construction of the connection with Sweden which is important to all Lithuanian electricity consumers, but also because the European Union has once again set an example of solidarity," Prime Minister Andrius Kubilius said in the press release. Kubilius said he was confident that Lithuania, Latvia and Sweden would agree on the location of the undersea cable.
Lietuvos Zinios, Lietuvos Rytas, Respublika
Friday, 20th of March
Will pay in parts
Lithuanian Economy Minister Dainius Kreivys will hold talks with Poland's PKN Orlen over a deal that would allow the Polish oil group to pay for the state's remaining 10 percent stake in Mazeikiu Nafta (Mazeikiai Oil) in tranches over a period of time. It is expected that a respective agreement will be signed as soon as Friday, unofficial sources said. The Cabinet gave the green light to Kreivys to negotiate tranche payments at an extraordinary meeting that was convened on Friday afternoon to discuss the government's deal with PKN Orlen. Speaking to reporters after the meeting, the Economy Minister would not comment on a possible payment schedule. He did not say either what proposal PKN Orlen had made to the government. "PKN Orlen has asked us to allow it to pay in tranches the amount of money due under the option agreement. As you know, the option deadline is Friday. On Thursday, the government discussed whether or not to give me the authority to negotiate with PKN Orlen on this issue," he said.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios
Klasco intends to leave
Klaipedos Juru Kroviniu Kompanija (Klaipeda Stevedoring Company, or Klasco), the largest stevedoring company in the port of Klaipeda, said on Thursday that it plans to delist its shares from the NASDAQ OMX Vilnius stock exchange and to offer to buy out minority shareholders at LTL 11 per share. Small shareholders hold around 7 percent of shares in Klasco, but the bourse estimates that, excluding the shares owned by the company's management and related persons, only 5.32 percent is the free float. The company would need LTL 7.414 million to buy those shares. Achemos Grupe President Bronislovas Lubys, who is also the chairman of Klasco's management board, cited low liquidity of its shares as the main reason for delisting.
Verslo Zinios, Lietuvos Rytas
Will Aurela take the place of flyLAL?
Unnamed Lithuanian investors are interested in investments into a new flagship carrier that would replace the bankrupt FlyLAL-Lithuanian Airlines at Vilnius Airport. Transport Minister Eligijus Masiulis told reporters after meeting with President Valdas Adamkus on Thursday that potential investors had visited the ministry and expressed their interest in the project, but asked for their names not to be made public. "Certain meetings with representatives of other business companies have taken place. They showed interest in the Lithuanian aviation market [and] investments, but they asked me not to mention their names," he said. The Transport Ministry plans to submit to the government in two weeks' time at least three possible models for establishing a new air carrier that would be based in Vilnius. It is expected that two models will provide for the state's participation in the airline's capital. However, Masiulis said that he personally was skeptical about the possibility for the state to invest in the new airline.
Lietuvos Rytas, Verslo Zinios
Thursday, 19th of March
Would save banks with state warranties
Lithuania's government is working on a scenario for the rescue of domestic commercial banks amid economic downturn. On Wednesday the Cabinet approved a bill on financial sustainability, which, inter alia, provides for guarantees to banks or investments into banking establishments. The bill will be coordinated with the European Central Bank (ECB) and the European Commission (EC) before being submitted to the parliament. "There is no need to take such measures now, but we do not know what the situation may be in future," Finance Minister Algirdas Semeta said during the government's meeting. The bill outlines preventive short-term measures, which the state could take in order to support the financial stability of the banking system. According to the government press service, the state could provide guarantees to banks when borrowing on the market, if this could support the reliability of the bank and the stability of its activities. The amount of liabilities, the fulfilment of which the state could guarantee, should not exceed the own capital of the bank, and the term of the guarantee should not exceed three years.
Verslo Zinios, Lietuvos Zinios, Lietuvos Rytas
Smaller electricity shock
Electricity prices in Lithuania will grow less than previously forecast from January 2010 based on current fuel prices and their trends, the chairman of State Control Commission for Prices and Energy has said. "The price of more than 60 cents (17.4 euro cents) [from 2010], which was forecast a year ago, was estimated based on different fuel prices," Virgilijus Poderys told the reporters after the meeting with Parliamentary Speaker Arunas Valinskas on Wednesday.
Lietuvos Zinios, Lietuvos Rytas, Verslo Zinios
Revenues from the panic
There are no indications that the latest litas devaluation rumor, which sparked a wave of buying of foreign currency two weeks ago, was started intentionally, Lithuania's parliamentary speaker, Arunas Valinskas, said on Wednesday. The generally tense situation in Lithuania and in neighboring countries is to blame for the bout of panic, he told reporters after meeting with Povilas Malakauskas, the director general of the Lithuanian State Security Department (SSD). Based on data from banks, they sold around EUR 40 million in several days, Valinskas said. Two weeks ago, hundreds of people rushed to buy euros and other foreign currency due to a rumor that the national currency was to be devaluated over the weekend.
Verslo Zinios, Lietuvos Rytas, Respublika
Wednesday, 18th of March
Seimas imposed caps
Traders say that a cap on wholesale and retail markup prices, approved by the Lithuanian parliament on Tuesday, will return the country to a planned economy and will make it the only EU member state with such restrictions. The Seimas (Lithuania's parliament) passed certain amendment s to the Law on Prices, imposing caps on markups for companies selling food products in the local market. Wholesale markups are capped at 15 percent of a product's purchase price, and retail markups at 20 percent. Marius Busilas, the executive director of the Association of Lithuanian Trade Enterprises, said that he disapproved of the measure.
Respublika, Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios
Gave away all the profit?
The Bank of Lithuania will have to turn its entire profit for 2008 over to the state to help plug the budget shortfall. The Cabinet plans to discuss on Wednesday amendments to the Law on the Bank of Lithuania to oblige the central bank to transfer 100 percent of its 2008 profit to the state coffers. The amendments will also have to be approved by the parliament. The existing law provides that 50 percent of the Bank of Lithuania's annual profit goes to the state coffers and the rest is channeled into the bank's capital.
The most loss making quarter
The aggregate pre-tax earnings of Lithuania's companies declined by almost a half last year compared with 2007, to LTL 8.1 billion, the country's Statistics Department reported on Tuesday. Earnings in the transport and energy sectors plunged more than twofold, while the profit in the post and telecommunications sectors declined by one-fourth, it said. Combined revenues, meanwhile, rose by 16 percent year-on-year to LTL 211 billion. In the fourth quarter alone, the combined losses came in at slightly more than LTL 1 billion, the department said. In the final quarter of 2007, the aggregate pretax profit of Lithuania's companies made up LTL 5.1 billion. Combined quarterly revenues edged down by 1 percent, year-on-year, to LTL 50.7 billion in October-December 2008.
Lietuvos Zinios, Verslo Zinios
Tuesday, 17th of March
Has borrowed again
The average yield on Lithuania's six-month Treasury bills rose to 8.698 percent on Monday, with LTL 52.6 million worth of securities sold at the auction. At the auction, the lowest yield bid received was 7 percent and the highest yield accepted was 9.9 percent. The demand in securities totaled LTL 139.107 million. The issue matures on Sept. 23.
The government intends to save by LTL 3 billion more
Faced with a worse-than-expected economic contraction, the Lithuanian government seeks to cut this year's state budget spending by up to LTL 3 billion. "In the near future, we will submit proposals to the Seimas [Lithuania's parliament] as to how to reduce the state's budget expenditure by around LTL 2.7-3 billion. The budget will amount to around LTL 16-17 billion," Prime Minister Andrius Kubilius told reporters after a meeting at the president's office on Monday. Finance Minister Algirdas Semeta said last week that salaries in the public sector would be reduced by 10 percent on average and that there were plans to cut spending on the state's investment projects as well. The central government's budget revenues for the first two months of this year totaled LTL 2.433 billion, falling LTL 389.6 million short of the target.
Verslo Zinios, Lietuvos Rytas
Expect for lower inflation
The Lithuanian Statistics Department predicts that the country's monthly inflation rate, as measured by the EU Harmonized Index of Consumer Prices (HICP), will reach 0.1 percent in March. The annual inflation rate is forecast at 7.5 percent this month and the average annual inflation rate at 10.5 percent, the statistics office said on Monday. An increase in prices in the alcoholic beverage and cigarette group is anticipated following a hike in the excise tax on cigarettes in early March, and a seasonal rise in clothing and footwear prices is also possible, it said. This should be partly offset by falling prices for furniture and furnishings and for textile goods. An anticipated decline in food product and soft drink prices may also have an impact on the consumer price index.
Verslo Zinios, Lietuvos Rytas, Lietuvos Zinios
Monday, 16th of March
Information about the budget of SODRA does not go with reality
Lithuania's State Social Insurance Fund (Sodra) ran a budget deficit of LTL 258.5 million in the first two months of this year, preliminary data showed on Thursday. The fund's budget deficit for February alone stood at LTL 36.7 million. Sodra's revenues the two months totaled nearly LTL 1.948 billion LTL 340.9 million, or 21.2 percent, higher than in the same period last year. Its expenditures increased by LTL 341.3 million, or 18.3 percent, year-on-year to LTL 2.206 billion, the fund said. Sodra's budget revenues for February reached LTL 1.146 billion LTL 11.7 million, or 1 percent, lower than planned, but LTL 242.7 million, or 26.9 percent, higher than a year ago. The fund last month received LTL 200 million from the state budget and other state financial sources.
The number of Verslo Zinios
Average hourly labor costs in Lithuania rose by 14.3 percent in the fourth quarter of 2008 compared with the same period a year ago, the Statistics Department reported on Friday. The growth slowed down in almost all segments of manufacturing, services, public administration and social activities, it said. The fastest growth in labor costs per hour was in education (27.3 pct), public administration and defense, compulsory social insurance (23.3 pct), real estate, rental and other business activities (22.5 pct).
Transferred LTL 266.83 to the pension funds
The Lithuanian state social insurance fund Sodra on Friday transferred a total of LTL 266.83 million into second-pillar pension funds, down 1.7 percent from LTL 271.43 million a quarter ago. The money represents contributions by 878,940 pension scheme participants for the fourth quarter of 2008, Sodra said. The decline in the amount of contributions was due to the lower number of participants (down from 879,400 last December) and, possible, lower salaries. The rate of employees' contributions to private second-pillar pension funds has been cut to 3 percent of a salary since the start of this year, down from the previous 5.5 percent.
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