LEO LT
Encyclopedia
LEO LT AB or Lithuanian Electricity Organization was a national energy holding company
in Lithuania
. The company owned shares of Lithuania's three major electric power production and distribution companies. It was established in early 2008 to raise funds for the construction of the planned Visaginas Nuclear Power Plant
after close down of Ignalina Plant
, and Lithuania–Sweden and Lithuania–Poland power connections. The decision to liquidate the company, mired in controversies and attacked by critics, was reached by the shareholder of LEO LT on 4 September 2009.
, and privately owned NDX Energija, part of VP Market
group, on the establishment of this "national investor" started on 30 November 2007. An agreement was reached on 20 December 2007, the Seimas
(Lithuanian Parliament) approved it on 1 February 2008, and President Valdas Adamkus
signed the law on 12 February 2008. LEO LT started its official operations on 20 May 2008 with capital of 5 billion litas (approx. US$2.3 billion).
According to the initial agreement, the shares of LEO LT were owned by the Republic of Lithuania (61.7%) and by private NDX Energija (38.3%). A small number of the shares (0.3–0.4%) were to be traded on the Vilnius Stock Exchange
. The Lithuanian government transferred to LEO LT its holdings in Lietuvos Energija
(96.4%) and RST (Rytų skirstomieji tinklai – Eastern Power Grid Company, 71.34%), while NDX Energija transferred 97.1% of shares in VST (Vakarų skirstomieji tinklai – Western Power Grid Company). The government planned to offer to buy a 20.3% stake in RST owned by E.ON
. The Kruonis Pumped Storage Plant
and Kaunas Hydroelectric Plant were excluded from LEO LT and remained at the disposal of the state.
and regulations of the European Union
on monopoly in energy. In its decision of 2 March 2009, the Constitutional Court of Lithuania ruled that while there were minor violations in the deal between the government and NDX Energija they were not substantial to merit voiding the agreement. The company was followed by continuous allegations of corruption. One commentator labeled the debacle as the "affair of the century".
Parliamentary elections at the end of 2008, brought a new government, under Prime Minister Andrius Kubilius
, that did not support LEO LT. On 4 September 2009, the Seimas voted to liquidate LEO LT. The agreement with NDX Energija on division of assets was signed on 4 December 2009. The government would retain shares in all three companies (Lietuvos energija, RST and VST) and pay a compensation of 680 million litas to NDX – about the same amount NDX paid for its share of VST in 2003 and 2004. Thus the deal is interpreted as favorable to the government. According to reports in the media, NDX made about 500 million litas from its investment in VST. However, analysts also point out lost opportunity costs: VST was valued at 2–3 billion litas in 2007.
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
in Lithuania
Lithuania
Lithuania , officially the Republic of Lithuania is a country in Northern Europe, the biggest of the three Baltic states. It is situated along the southeastern shore of the Baltic Sea, whereby to the west lie Sweden and Denmark...
. The company owned shares of Lithuania's three major electric power production and distribution companies. It was established in early 2008 to raise funds for the construction of the planned Visaginas Nuclear Power Plant
Visaginas nuclear power plant
Visaginas nuclear power plant is a planned nuclear power plant project in Lithuania. It is proposed to be built at the site of the closed Ignalina Nuclear Power Plant which was shut-down on 31 December 2009 in accordance with Lithuania's accession agreement to the European Union...
after close down of Ignalina Plant
Ignalina Nuclear Power Plant
The Ignalina Nuclear Power Plant is a closed two-unit RBMK-1500 nuclear power station in Visaginas, Lithuania. It was named after the nearby city of Ignalina...
, and Lithuania–Sweden and Lithuania–Poland power connections. The decision to liquidate the company, mired in controversies and attacked by critics, was reached by the shareholder of LEO LT on 4 September 2009.
Formation
On 28 June 2007, Lithuania's parliament adopted a law on building a new nuclear power plant. The law also stipulated creation of a "national investor" to gain investments for the new nuclear power plant. The talks between the government, under Prime Minister Gediminas KirkilasGediminas Kirkilas
Gediminas Kirkilas is a former Prime Minister of Lithuania . He was appointed on 4 July 2006 after Zigmantas Balčytis, the provisional Prime Minister, failed to gather the required support from the Seimas. Kirkilas managed to get the necessary support from the Seimas on 4 July 2006...
, and privately owned NDX Energija, part of VP Market
VP Market
VP Group is one of the largest Lithuanian groups of private companies. It is a holding company through which shareholders manage numerous subsidiaries. It traces its roots to 1992...
group, on the establishment of this "national investor" started on 30 November 2007. An agreement was reached on 20 December 2007, the Seimas
Seimas
The Seimas is the unicameral Lithuanian parliament. It has 141 members that are elected for a four-year term. About half of the members of this legislative body are elected in individual constituencies , and the other half are elected by nationwide vote according to proportional representation...
(Lithuanian Parliament) approved it on 1 February 2008, and President Valdas Adamkus
Valdas Adamkus
Valdas Adamkus was President of Lithuania from 1998 to 2003 and again from 2004 to 2009.In Lithuania, the President's tenure lasts for five years; Adamkus' first term in office began on February 26, 1998 and ended on February 28, 2003, following his defeat by Rolandas Paksas in the next...
signed the law on 12 February 2008. LEO LT started its official operations on 20 May 2008 with capital of 5 billion litas (approx. US$2.3 billion).
According to the initial agreement, the shares of LEO LT were owned by the Republic of Lithuania (61.7%) and by private NDX Energija (38.3%). A small number of the shares (0.3–0.4%) were to be traded on the Vilnius Stock Exchange
Vilnius Stock Exchange
The NASDAQ OMX Vilnius is a stock exchange established in 1993 operating in Vilnius, Lithuania. It is owned by OMX, which also operates Helsinki Stock Exchange and Stockholm Stock Exchange....
. The Lithuanian government transferred to LEO LT its holdings in Lietuvos Energija
Lietuvos Energija
Lietuvos Energija is the main power company in Lithuania. It owns the largest power plant in Lithuania Elektrėnai Power Plant and directly owns two largest hydroelectric plants in the country . It has also stake in the Klaipėda Geothermal Demonstration Plant...
(96.4%) and RST (Rytų skirstomieji tinklai – Eastern Power Grid Company, 71.34%), while NDX Energija transferred 97.1% of shares in VST (Vakarų skirstomieji tinklai – Western Power Grid Company). The government planned to offer to buy a 20.3% stake in RST owned by E.ON
E.ON
E.ON AG, marketed with an interpunct as E•ON, is the holding company of the world's largest investor-owned energy service provider based in Düsseldorf, Germany. The name comes from the Greek word aeon which means eternity....
. The Kruonis Pumped Storage Plant
Kruonis Pumped Storage Plant
Kruonis Pumped Storage Plant is located near Kruonis, Lithuania, east of Kaunas. Its main purpose is to provide a spinning reserve of the power system, to regulate the load curve of the power system 24 hours a day. It operates in conjunction with the Kaunas Hydroelectric Power Plant...
and Kaunas Hydroelectric Plant were excluded from LEO LT and remained at the disposal of the state.
Dissolution
The formation of LEO LT was controversial and attracted much criticism. The main complains included that the new company would again monopolize the market which was divided only in 2002, that NDX Energija was selected as a partner without a public competition, and that the deal possibly violated the Constitution of LithuaniaConstitution of Lithuania
The Constitution of the Republic of Lithuania defines the legal foundation for all laws passed in the Republic of Lithuania. It was approved in a referendum on October 25, 1992.-History:...
and regulations of the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
on monopoly in energy. In its decision of 2 March 2009, the Constitutional Court of Lithuania ruled that while there were minor violations in the deal between the government and NDX Energija they were not substantial to merit voiding the agreement. The company was followed by continuous allegations of corruption. One commentator labeled the debacle as the "affair of the century".
Parliamentary elections at the end of 2008, brought a new government, under Prime Minister Andrius Kubilius
Andrius Kubilius
Andrius Kubilius is a Lithuanian politician who has been Prime Minister of Lithuania since 2008. He previously served as Prime Minister from 1999 to 2000. He is the leader of the conservative political party Homeland Union – Lithuanian Christian Democrats.- Biography :Kubilius was born at Vilnius...
, that did not support LEO LT. On 4 September 2009, the Seimas voted to liquidate LEO LT. The agreement with NDX Energija on division of assets was signed on 4 December 2009. The government would retain shares in all three companies (Lietuvos energija, RST and VST) and pay a compensation of 680 million litas to NDX – about the same amount NDX paid for its share of VST in 2003 and 2004. Thus the deal is interpreted as favorable to the government. According to reports in the media, NDX made about 500 million litas from its investment in VST. However, analysts also point out lost opportunity costs: VST was valued at 2–3 billion litas in 2007.