Veolia takes Lithuania to court over regulatory changes

Veolia said on Wednesday it was seeking $109 million compensation from Lithuania at the International Centre for Settlement of Investment Disputes, after regulations impacted in its facilities in the country, many of which are combined heat and power plants.

In a statement the company said it ‘has resorted to international arbitration due to the unwillingness of the Lithuanian State to compensate the company after unfair and discriminatory changes in laws and regulations have resulted in extensive losses suffered by its fully-owned subsidiaries, Vilniaus Energija and Litesko.’

According to Veolia’s Request for Arbitration, Lithuania has engaged in a campaign of harassment
The Lithuanian government scrapped subsidies for gas use in the power and heating sector from 2016, forcing Vilniaus Energija to close one of its CHP plants in Vilnius.

According to Veolia’s Request for Arbitration, Lithuania has engaged in a campaign of harassment against the company for political reasons. Veolia’s initial estimate could amount to over a 100 million euros.
Vilnius CHP
Veolia said that Lithuania is a sovereign country and legislation is its prerogative but said it was seeking compensation due to “unfair and discriminatory legal acts and decision regulating its activities” in the Baltic state.

“But when laws and their interpretation constantly change with the resultant effect of assets and investments being undermined, without any consideration for compensation, what company can work within a context of such a level of regulatory instability?,” Veolia’s Central and Eastern Europe chief Malika Ghendouri said in a statement, adding, “We have tried many times to establish constructive dialogue with the authorities. As of today, we still have had no response.”

Veolia supplies heat in Lithuania’s capital Vilnius and another nine municipalities in the Baltic state. Its 15-year lease on the central heating grid in Vilnius, expires in 2017, and the municipality has said it doesn’t plan to extend it.

In its statment Veolia said, through its Lithuanian subsidiaries Vilniaus Energija and Litesko, it has been investing and operating in Lithuania and supporting the country’s development for nearly two decades. The Veolia Group currently employs 1,300 people in the country. With Lithuanian investments amounting to over 200 million euros, the Veolia Group has improved and modernized the heating networks of 10 Lithuanian cities, including the capital city of Vilnius.

The Lithuanian government says the French power company is guilty of inflicting overly high heating costs, and is considering a counter claim.

“It seems, that Veolia has decided to fire the first shot, and will try now to prove that the state has abused it, not the opposite,” said Energy Minister Rokas Masiulis.

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