Gazprom-Led Consortium Buys Kaunas Power Plant in Lithuania - 2 April, 2003

The Kauno Termofikatsios Elektrine (KTE) international consortium and Lithuanian company Kauno Energia have signed an agreement on the sale of the Kaunas power plant. According to Gazprom's press office, KTE has to pay around USD 35 million for the plant as well as financing a USD 42-million investment programme up to 2006. The investment programme is for reconstructing and modernizing the power plant, and also to increase its production capacity from 170 MW to 250 MW. Following the investment programme. the plant should break even within 7 years.

On March 28, 2003 Gazprom's board of directors voted in favour of the Russian concern's participation in KTE's share capital. Gazprom will initially receive 99% of KTE's shares. US company Clement Power and Lithuanian company Dujotekana will each receive 0.5%. Gazprom's board of directors also approved a possible future sale of 48% of KTE's shares to the other two shareholders. Increases in the stakes of the other two shareholders will be dependant on them attracting financing for the purchase of the power station, the creation of operating capital, and implementing the investment programme.

A tender for the sale of the Kaunas power station, which belongs to Kauno Energia, was announced in May 2002. In September 2002 the winner of the tender was announced as a consortium consisting of Gazprom, Dujotekana and Clement Power Venture. The Kaunas power plant produces about 80% of the heating consumed in Kaunas, Lithuania's second largest city.