Lithuania Business News: Archive 2003-
Saturday, 12th of September
Supply will exceed demand
Lithuania will be able to generate and import three times more electricity than it needs after the shutdown of the Ignalina Nuclear Power Plant (INPP) at the end of this year, a special task group established by the Energy Ministry has confirmed after studying the electricity markets in Lithuania and the neighboring countries. "Preliminary sale offers from other countries show that the companies supplying electricity to Lithuania's market are eager to participate actively in the electricity market that will actually start operating from next year," said Edvardas Vazgela, a task group member and the head of market administration department at Lietuvos Energija (Lithuanian Energy), the Lithuanian power transmission system operator. As estimated by the experts, Lithuania will need some 9.1 billion kWh of electricity next year, while the supply potential reaches some 27.5 billion kWh. Based on the Lithuanian electricity market development plan approved by the government, the country's power plants should generate about 4.5 billion kWh of electricity in 2010. Some 1 TWh will be acquired under a provisional agreement with Estonia. The remaining 35 percent of electricity needs would be covered by electricity purchased from Estonia, Latvia, Scandinavia, Ukraine, Russia and/or Belarus under market terms.
Respublika, Lietuvos Rytas
Allowed to buy out stocks
Sweden's TeliaSonera, the majority shareholder of Teo LT, has been given the green light to launch a voluntary tender offer to purchase another 35.33 percent of shares in the Lithuanian telecoms company at LTL 1.83 a share. The Lithuanian Securities Commission on Friday approved the tender offer circular, the authority said.
Lighter in 2011
Lithuania's gross domestic product will slump by 18.2 percent this year and shrink by another 4.3 percent next year before returning to growth in 2011, according to the Finance Ministry's latest forecasts released on Friday. The ministry expects the economy to expand by 4.5 percent in 2011, but in 2012, GDP growth should slow to 2.1 percent. It forecasts that the number of the unemployed will further increase this year due to economy decline. In 2010 the unemployed will constitute a fifth of all workforce and due to this salaries will further decrease. It is forecasted that this year average unemployment will be 14.6 percent, whereas in 2010-2012 it will be 19.8 percent, 15 percent and 14.1 percent respectively.
Friday, 11th of September
Banks may not provide loans
Stasys Kropas, the president of the Association of Lithuanian Banks, states that some commercial banks may not provide loans in autumn because they are afraid to violate one of the standards limiting their activity. He emphasized that banks will not lack money but it will be more difficult for them to implement requirements of capital sufficiency due to increasing provisions. According to Kropas, it is difficult for both Scandinavian and Lithuanian banks to raise capital. He did not want to mention which banks may lack money. According to the data of the Association of Lithuanian Banks, now Lithuanian commercial banks have about 12 percent of overdue loans: 4.6 percent of them are accommodation loans and 7.4 percent are business loans. Loan portfolio has decreased by more than LTL 5 billion in seven months from the beginning of this year.
Lietuvos Zinios, Verslo Zinios, Respublika
Klaipeda is lagging behind
Extent of shipment has reduced much in the only port in the Baltic States, in Klaipeda port. It has been transhipped 17,841 million tons in the eight months this year in Klaipeda port which is by 13.7 percent less than last year. Joint port of Tallinn has pulled in 20.775 tons of shipments, which is by 6.5 more than last January-August; this port has transhipped the biggest amount of shipments. The turnover of Riga port has increased by 3.5 percent, up to 20.094 million tons in the same period.
Hourly labor became cheaper by 3.1 percent
Average hourly labor costs in Lithuania's industrial, construction and services companies fell by 3.1 percent in the second quarter of this year compared with a year ago, the Statistics Department reported on Thursday.
This change was mostly influenced by declined extent of work, premiums, allowances in addition to salaries and onetime allowances. Hourly labor decreased by 19.2 percent in construction, by 18.2 percent in services, by 11.8 percent in real estate operation activity, by 7.7 percent in mining and by 6.7 percent in trade.
Thursday, 10th of September
Gazprom does not promise cheaper gas
Russian company Gazprom does not like indifference of Lithuanian government to gas pipeline which is being laid from Jurbarkas to Klaipeda. Viktor Golubev, deputy chairman of Gazprom's management board, stated that it was planned that half of the sum would be invested by the company Lietuvos Dujos (Lithuanian Gas) and half by Lithuanian government. Golubev also maintained that the government's planned new liquefied natural gas (LNG) terminal was an interesting project but did not give a direct answer to the question whether the group would like to participate in this project. Energy Minister Arvydas Sekmokas has said recently that Lithuania is looking for a strategic investor in the terminal from a foreign country rich in natural gas. The government plans to build the terminal on the grounds of the state-run oil terminal operator Klaipedos Nafta (Klaipeda Oil). One of the heads of Russia's national gas concern Gazprom expressed concern over Lithuanian President Dalia Grybauskaite's statements that the country did not need a new power plant in Kaunas that Gazprom intended to invest about LTL 1 billion. Earlier this month, Grybauskaite said in Kaunas that Lithuania did not need a new powerful power station projected by the Kauno Termofikacine Elektrine (Kaunas Combined Heat and Power Plant, or KTE), operated by Gazprom. In her words, each city, including Kaunas, could ensure the supply of heating through the incineration of waste.
Lietuvos Zinios, Verslo Zinios
Worse conditions for business
Lithuania and the other two Baltic states remain among the top 30 countries in the world in terms of the overall regulatory ease of doing business. Lithuania is ranked 26th out of 183 countries reviewed in the Doing Business 2010 report by the World Bank, down from 25th place a year ago. Estonia slipped two notches in the global ranking, to number 24, but is still the highest-ranked country among the three Baltic States. Latvia is placed at number 27, up from 30th place a year ago. Lithuania is ranked as low as 119th for ease of employing workers, 99th for ease of starting a business, and 93rd for ease of protecting investors. It came 64th for ease of dealing with construction permits, 51st for ease of paying taxes and 43rd for ease of getting credit. The country fared much better in terms of ease of registering property and enforcing contracts, ranking 4th and 17th in the world, respectively.
Flats are becoming cheaper
The prices of apartments offered for sale in five largest Lithuania's cities shrank by 3.3 percent in August versus July.The declines ranged from 4.9 percent in Siauliai to 0.6 percent in Klaipeda, the apartment price index calculated by Ober-Haus Nekilnojamas Turtas (Ober-Haus Real Estate) on a monthly basis has shown. Compared with August 2008, the prices of apartments in Vilnius, Kaunas, Klaipeda, Siauliai and Panevezys plunged by 30 percent last month. The annual decline was 30 percent, the company said in a statement.
Wednesday, 9th of September
Price of heating will decrease in Vilnius
Vilnius officials expect that the district heating price in the capital in the new heating season will be among the lowest in Lithuania. The National Control Commission for Prices and Energy forecasts that Vilniaus Energija's (Vilnius Energy) district heating price in November will be LTL 0.173 per kilowatt-hour (KWh), not including VAT, Vilnius' local government said in a presentation. Only Klaipeda will have a lower price, LTL 0.1677 per kWh, they said. Vilniaus Energija estimates that the district heating price in Vilnius will decline by around 23 percent in comparison with last year. The heating prices in Kaunas, Panevezys and Siauliai are forecast to be LTL 0.1911, LTL 0.196 and LTL 0.2119 per kWh, respectively.
Lietuvos Rytas, Respublika, Verslo Zinios
Prices decreased again in August
Lithuania's consumer prices edged down by 0.2 percent in August compared with July, marking the fifth consecutive month of negative inflation, the Statistics Department reported on Tuesday. The 12-month inflation rate in August eased to 2.6 percent and the average annual inflation rate was down to 7.1 percent.The monthly decline in the consumer price index (CPI) was mostly due to lower prices for food products and non-alcoholic drinks (down 1.2 percent) and clothing and footwear prices (down 0.9 percent). This was partly offset by a 0.9 percent in increase in transport costs and a 0.6 percent rise in recreation and culture goods and services. Analysts of commercial banks think that prices will increase in September due to increased VAT but in October there will be deflation again or zero inflation.
Almost LTL 5 million to projects
The Ministry of Economy has allocated LTL 4.75 million from the finances of 2007-2013 EU structural support for implementation of 29 electronic business projects according to the means E-verslas LT (E-business LT). Lithuanian companies have received such significant sums for implementation of electronic business projects for the first time. Earlier these projects were not supported or supported by small sums. Jekaterina Sarmaviciene, the director of EU Structural Support Department at the Ministry of Economy, states that many companies are interested in this possibility to receive support. The worth of all requisitions is LTL 56.07 million, whereas the sum indicated in invitation is LTL 66.7 million.
Tuesday, 8th of September
Third of EU support has been distributed
The Minister of Finance Ingrida Simonyte states that only 36 percent of support from EU funds have been distributed in the first half-year. The Ministry of Environment, the Ministry of Education and Science, the Ministry of Interior and the Committee on the Development of Information Society are among institutions which fall behind schedule. Simonyte maintains that this does not mean that these institutions are working worse but projects themselves are more complicated.
Lietuvos Zinios, Lietuvos Rytas
Finished gas pipeline project
The company Lietuvos Dujos (Lithuanian Gas) has finished one more investment project, worth LTL 38 million, which will increase extent of gas transit to Kaliningrad. Lietuvos Dujos has announced that 139.2 kilometres of gas pipeline was laid in Kaliningrad district and 18.4 kilometres in Lithuania. Moreover, throughput of Sakiai gas record station has been raised. Trunk gas pipeline Sakiai-Kalinigrad and Sakiai gas record station, which cost LTL 20.5 million, was built by the Lithuanian company Kauno Dujotiekio Statyba (Kaunas Gas Pipeline Construction). Pipelines were laid by a Polish company. It is planned to build one more Jauniunai compressor station in Sirvintai district by 2010.
Russia hit in August
Rokiskio Suris (Rokiskis Cheese), one of the biggest dairy groups in Lithuania, said on Monday that its consolidated sales revenue for the first eight months of this year fell to LTL 374.800 million, down 16.2 percent from LTL 447.300 million a year ago, based on preliminary data. The group's monthly sales for August slumped by 25.87 percent year-on-year to LTL 49.6 million, Rokiskio Suris reported to the NASDAQ OMX Vilnius stock exchange.
Monday, 7th of August
Food is slowly becoming more expensive
As VAT has been increased in September, trade centres IKI and Rimi have raised prices of food. Trade centres Maxima and Norfa are covering increased taxes from their own accounts. Prices of food product in Rimi have increased by 2 percent; however, prices in trade network Supernetto, which belongs to Rimi, have not changed. Trade centre IKI has not raised prices of the cheapest food products. Renata Saulyte, the representative of trade network Maxima, states that their possibilities to retain present prices are limited; suppliers and producers are claiming the same. She maintains that some products will become more expensive and some cheaper in the nearest future.
Increasing VAT is destroying hopes of business
Due to increased VAT for the second time in a half-year, businessmen are made to change not only accounting and cash-registers but they are also experiencing losses due to long-term contracts with business partners. Violeta Latviene, the Director of Economy and Finance of the concern Achemos Grupe, states that businessmen are confronting technical problems related to changed taxes but what is worse is contracts which include prices. She asks who will compensate increased tariff. The government is planning to collect additional about LTL 170 million income in 2009 and about LTL 600 million in 2010 from increased VAT.
Offer to establish bilateral laboratory
Confederation of Lithuanian Industrialists decided to offer Russia bilateral laboratory which would evaluate standards of food and veterinary products. In this way it is aimed to avoid problems on the frontier. Remigijus Kabecius, the Director of Lithuania’s Economic and Trading Cooperation with Russia Business Council, states that although food and veterinary laboratories of Russia are among the best laboratories in the world but Russia is not a member of the World Trade Organization. Thus, this country can introduce its own standards which would be more favourable to their producers. Lithuanian institutions are attempting to negotiate with Russia regarding this issue.
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