A plan formally got under way to restructure the Lietuvos Energija power utility in line with World Bank and International Monetary Fond guidelines.
But Lithuania's argument with the European Commission over the future of the loss making Ignalina nuclear power plant has yet to be resolved.
Prime Minister Algirdas Brazauskas again reiterated his opposition to the full decommissioning of the Ignalina nuclear power plant by 2009 - something European Commission officials have set as a precondition for Lithuania joining the EU.
"Of course we are dissatisfied with the EU's date," Brazauskas told reporters.
Lithuania argues that upgrades to the plant's two RBMK reactors - the same type that exploded at Chernobyl in 1986 - mean it will continue to be safe. The first one is scheduled to be shut down in 2005 but no commitment has been made on the second.
"We are expected to work out the closure of the second block at a time when we haven't completed work on closing the first one," Ignalina's director general Viktor Shevaldin complained to reporters after a meeting with government officials last week.
He argued that there is a lack of space in the reservoir where used fuel rods from the first reactor must sit cooling for seven years, making 2009 an impractical deadline for the closure of the second reactor.
The plant, north of Vilnius, was originally built to serve consumers throughout a large area of the Soviet Union and is not running at full capacity. This year it is expected to make losses of around 40 million litas ($10 million).
In its national energy strategy, Lithuania decided to close down the first reactor by 2005, and to make a decision on the second reactor in a new energy strategy to be drafted in 2004. International donors have pledged more than 200 million euros for closure of the first block.
Ignalina is not part of the mainly state-owned Lietuvos Energija and is exempt from privatization under a specific Lithuanian law on strategic institutions.
Due to this separation Lietuvos Energija posted a pretax profit of 73 million litas for the first nine months of this year, a 21 percent rise from the same period a year ago.
Executives of the company expect that the restructuring process will be completed smoothly and that five separate energy companies will be operational on Jan. 1, 2002.
"Lietuvos Energija's financial indicators are rather good, so it will leave a rather good legacy for the new companies," said Dangiras Mikalajunas, managing director of Lietuvos Energija.
Shareholders of Lietuvos Energija endorsed on Nov. 5 the company's restructuring plan, which calls for completing the process in late December.
Two electricity distribution network operators - Vakaru Skirstomieji Tinklai (western distribution system) and Rytu Skirstomieji Tinklai (eastern distribution system) - and two power production facilities, in Elektrenai and Mazeikiai, will be established in the course of restructuring. Lietuvos Energija will continue to operate the transmission network.
The shareholders approved by-laws for all these companies as well as a 40.4 million litas reduction in Lietuvos Energija's authorized share capital (currently 1,807 billion litas) in line with the jettisoning of these business units.
Shares in these five companies will be given to all shareholders in proportion to their existing holdings. The state-owned portion of these companies, amounting to 85.72 percent, will go to the State Property Fund.
If regulators approve tariffs proposed by Lietuvos Energija, the five companies' net profit targets for 2002 will be set at 55.7 million litas, 49.5 million litas, 0.6 million litas and 78.6 million litas respectively.
Lietuvos Energija anticipates an annual profit of around 100 million litas in 2001 after posting a profit of 73 million litas for the first nine months of this year.
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