Vilnius considers launching heating grid modernization tender

The proposal passed the first reading at the council by a vote of 29 to 13 and will now be debated by municipal committees before returning to the council.

"We propose to announce a tender for the modernization of Vilnius' heating grid. There is a European Union directive that requires that we carry out modernization work by 2016 in order to reduce pollution. In our opinion, the best solution is to modernize by switching to biofuel," Arūnas Keserauskas, director of Vilniaus Šilumos Tinklai (Vilnius Heating Grid), told members of the council on Wednesday.

Keserauskas said that the modernization should help reduce heating bills in the capital city.

He said that a tender is planned to be launched by 1 August and that the terms and conditions of the tender process are currently being worked out together with the auditing firm KPMG Baltics.

Vilnius' local government estimates that investments in the heating sector modernization to bring it into line with the EU's requirements could reach 450 million to 1.2 billion litas (EUR 130-348 mln).

In early April, the city's authorities sent a complaint to the European Commission against the central government over its alleged delay in modernizing combined heat-and-power (CHP) plants. If the EU's executive body decides to file an infringement action with the European Court of Justice, Lithuania may face fines ranging from 1.9 million to 119 million litas.

The CHP plants of Vilnius, Kaunas and Mažeikiai will have to comply with the EU's pollution requirements starting 2016. 

The City Council of Vilnius in June 2010 rejected a proposal to extend the lease of the city's district heating system to the French group Dalkia for another 20 years, from 2017 to 2037. The extension was then said to be a pre-condition for Dalkia to invest into biofuel facilities.

The central government and President Dalia Grybauskaitė have repeatedly criticized Vilnius' authorities for their allegedly poor management of the capital's energy sector and Vilnius Mayor Artūras Zuokas for his alleged interests in this business.
Grybauskaitė has described the Icor Group's interests as "dominating" in the capital's heating sector and said that the city's authorities are to a great extent responsible for that situation.

The city's heating sector has been leased to Vilniaus Energija (Vilnius Energy), which is controlled by France's Dalkia and is related to Icor.