Lithuania banking on solidarity with neighbors on electricity market

Located in Central Lithuania, fertilizer producer Achema is the biggest natural gas consumer in the country.
Located in Central Lithuania, fertilizer producer Achema is the biggest natural gas consumer in the country. Source: ERR

Lithuania itself produces just nearly one third of its total electricity consumption, driving up prices for the entire region. Lithuanians intend to increase renewable production capacities, but are also relying on solidarity and cooperation among neighbors.

While the market price of electricity in Lithuania is generally higher than in Estonia, speaking to people on the street in Vilnius, they don't seem as acutely concerned as Estonian residents.

"I have a good price — 24 cents [per kilowatt-hour]," Vilnius resident Zita told ERR correspondent Epp Ehand. "I'm fine."

"I looked at my electricity bill," Daiva said. "Comparing a year ago and now, the price has doubled. We have to pressure the government to make a normal plan for us."

"We'll pay everything we need, so long as there's no war and Putin doesn't come here," said Roma, referring to the Russian president. "Everything's fine; we're living like kings."

The majority of household consumers in Lithuania have signed up for long-term fixed-rate plans, and the state is likewise providing energy bill support.

"If the price of a kilowatt-hour of electricity is 32 cents, for example, then we pay 9 cents of that," said MP Kazys Starkevicius, chair of the Committee on Economics of the Seimas. "If the price of a kilowatt-hour is 40 cents, then we likewise pay 9 cents of that."

Thus it is businesses initially being hit harder by these price hikes. One power company had to cease operations, while fertilizer producer Achema, the country's biggest consumer of natural gas, will be suspending operations for several months. Business-owners want support from the state for concluding direct contracts with producers as well as for boosting energy efficiency.

"Our confederation is discussing with the government how to speed up the processes here," said Martynas Nagevicius, vice-president of the Lithuanian Confederation of Industrialists (LPK). "And then of course some companies are asking for direct energy subsidies, but we have differing opinions about that."

According to the chair of the Seimas' Committee on Economics, Lithuania's state energy support this year has totaled €640 million, but plans are in the works for an aid package worth up to €1 billion for next year.

Lithuania is also planning to rapidly expand its own electricity production, as its current production capacity only covers nearly one third of total domestic electricity consumption, and much of that is being produced using natural gas, whose own price has soared.


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Editor: Aili Vahtla

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