Lithuanian district heating supplier Litesko, a subsidiary of France’s Veolia, is embroiled in a legal battle with the southern city of Alytus over a biomass-fired combined heat and power (CHP) plant and the city’s heat network.

In 2001, Litesko signed a 15-year heat network lease with the city, and in 2005 the lease was extended until 2026. However, in September 2016 Lithuania’s Competition Council found that the lease extension was illegal, its report stating that the city had privileged Litesko over its competitors in a tender aimed at modernizing the heat network. 

The city has now petitioned the court to terminate Litesko’s lease ahead of time.

According to reports in the Lithuanian press, the city’s claim included a compensation request for €14.2m ($16.8m) for equipment and unused pollution allowances.

Litesko this week filed a counterclaim for compensation in the amount of €34m. The claim includes €9m for investments and €25m as payment for the power plant, which it built and owns.

Litesko said it aims to recover investments in the plant which would have been recouped through distributing district heat during the contract period.

Along with fellow Veolia subsidiary Vilniaus Energija, Litesko provides almost 50 per cent of Lithuania’s power and district heat. Together the firms operate ten plants and produce around 3.2 TWh of heat and 1 TWh of power per year, serving around 700,000 consumers.