VILNIUS - Amid speculations that the deal between Lithuania's State Property Fund and Russia's gas giant Gazprom would not be finalized by year's end, representatives from both sides last week announced that they had moved closer to a final deal on the sale of a 34 percent stake in the state-run gas utility Lietuvos Dujos (Lithuanian Gas).
On Dec. 4, after more than a year of negotiations, State Property Fund director Povilas Milasauskas and Gazprom Deputy Chairman Alexander Ryazanov initiated a draft agreement, according to which Gazprom will transfer 100 million litas (29 million euros) for the stake in the utility.
Though it remained unclear whether the deal would close in late December or in January, Prime Minister Algirdas Brazauskas, along with Ryazanov, hopes to conclude the agreement in the near future having found "shared interests."
Negotiations on a deal with Gazprom had hit several setbacks in the past year. Gazprom - the sole applicant that fulfilled the government's criteria for bidders - wanted the Baltic state to cease certain gas pricing regulations.
Moreover, the gas giant had previously offered 80 million litas for the stake, only two-thirds of the government's asking price.
Progress in the negotiations came when both sides reached an agreement on the capping of gas prices for large industrial users. Talks were also helped along by Economy Minister Petras Cesna's recent decision to reduce the annual cap for large industrial users from 15 million cubic meters to over 1 million cubic meters.
Last year the German companies Ruhrgas and E.ON Energie transferred approximately 116 million litas for a 34 percent stake in Lietuvos Dujos. Though the German consortium deposited an additional 34 million litas as a premium into a special bank account, it will only be paid out on the condition that authorities improve the system of price-capping.
When the current deal with Gazprom reaches completion, the Lithuanian government's holding in Lietuvos Dujos will become 24.36 percent. The Ruhrgas-Energie consortium now holds 35.49 percent and small investors another 7.64 percent.
Once the new deal is signed Gazprom will have access to the Lithuanian market through 2015. (BBN, BNS)
