Rytinės Naujienos
Weekly News
September 19, 2006
AB SEB Vilniaus Bankas, Economic Research Team of CEO Adviser
Tel: +370 5 268 2517, 268 2508, 268 2521, Fax. +370 5 268 2508, E-mail: gitanas.nauseda@seb.lt, alge.budryte@seb.lt, vilija.tauraite@seb.lt
Russian oil will not reach Lithuania through pipeline this year, BĹ«tingÄ— terminal closed for
repairing
September 19, 2006 (BNS, SEB Vilniaus Bankas) - Lithuanian oil refinery "MaĹľeikiĹł nafta" will
not receive any Russian oil through pipeline this year, plan of oil exports from Industry and Energy
Ministry of Russia confirms. Russia oil does not come to Lithuania through pipeline since July 25.
Furthermore, BĹ«tingÄ— terminal stopped operation from September 19 to October 5 for repair works.
At the end of July, oil pipeline between Russia and Lithuania broke near Briansk city.
However, oil shipping experts say that no objective obstacles for transporting oil exist and only
goodwill is lacking, daily “Lietuvos rytas” reads. Instead, "Mažeikių nafta" received first deliveries of
crude from Venezuela in the middle of September.
Vice-minister of economy Vytautas NauduĹľas told that "MaĹľeikiĹł nafta" has enough of oil and
no problems are expected to rise due to supply shortages. For the time of BĹ«tingÄ— terminal repair, 350
thousand tons of crude are stocked up which will be enough for full operation of "MaĹľeikiĹł nafta" for
ten days.
"Most likely, crude stocks were bought more expensively before the terminal’s maintenance
works than it would cost now. Also, profit margin of the company has declined together with
decreasing oil prices,” said financial analyst Vytautas Plunksnis. In his opinion, July and August were
quite successful for "MaĹľeikiĹł nafta" but September will be rather difficult due to combination of
several unfavourable factors.
Meanwhile, Polish company “PKN Orlen” that is buying a majority stake in "Mažeikių nafta", is
changing its board members. According to Polish press, CEO of “PKN Orlen” Igor Chalupec will stay in
his position until the end of year. The main initiator of changes in “PKN Orlen” management is
considered to be Polish government. After parliamentary elections, then-Prime Minister Kazimierz
Marcinkiewicz criticized Polish oil refineries for setting high fuel prices and thus striving for higher
profits.
Government is expected to announce new target date for euro introduction soon
September 18, 2006 (BNS, SEB Vilniaus Bankas) – Lithuanian Government will have to
decide upon new targeted date for euro introduction in the nearest future.
According to Prime Minister Gediminas Kirkilas, the decision of the Government will appear in
the near term not only because of need to consider euro introduction possibilities in Lithuania but also
due to visit of European Commissioner of Economic and Monetary Affairs Joaquin Almunia.
According to spokeswoman of Prime Minister Nemira PumprickaitÄ—, J.Almunia will come to
Lithuania at the beginning of October.
In opinion of Gitanas NausÄ—da, adviser to CEO of SEB Vilniaus Bankas, the Government
should put efforts to introduce euro at the beginning of 2009, since both 2009, proposed by
economists, and 2010, unofficially circulated around by members of the Cabinet, will equally difficult
regarding the EMU entrance.
"Moody's" upgraded Lithuanian long-term credit rating to A2
September 12, 2006 (BNS, SEB Vilniaus Bankas) – International credit rating agency
"Moody's" upgraded long-term credit rating for Lithuania to A2, considering improved stance of public
finances and robust economic development.
"Improving credit rating for Lithuania reflects enhanced economy’s resilience to external
shocks and overheating risk,” said Nina Ramondelli, senior vice-president of "Moody's".
"We believe that European Commission’s veto on euro introduction in Lithuania will not
impede the country’s European integration and will not change the direction of management of public
finances,” added N.Ramondelli.
September 19, 2006
1
The information and data used in this review is taken from external sources, i.e. news agency BNS, Bank of Lithuania, Statistics Lithuania, Ministry of Finance and other institutions. SEB Vilniaus Bankas does not
accept any responsibility for accuracy, validity and completeness of the information taken from external sources.
"Moody's" experts note that economic reforms in Lithuania have encouraged one of the
fastest economic developments among new EU members. The report also emphasizes that fiscal
discipline and structural reforms had positive effect on budget deficit and state debt.
"However, Lithuania remains one of the weakest countries among new EU members
regarding income per capita, domestic savings and investment climate. In order to sustain economic
growth, progress in these fields is also necessary,” said N.Ramondelli.
Privatisation of RytĹł Skirstomieji Tinklai in the pipeline
September 12, 2006 (BNS, SEB Vilniaus Bankas) – A study on what is the best way to
privatise “Rytų Skirstomieji Tinklai” (Eastern Distributional Network of electricity) should be presented
to the Economy Ministry in the first quarter of 2007, but already today this issue is broadly discussed
among businessmen.
German “E.ON Energie,“ Lithuanian “Vilniaus Prekyba,” Lithuanian “Hermis Capital,”
Lithuanian “MG Baltic,” Estonian “Eesti Energia” and Latvian “Latvenergo” are considered to be
potential buyers of “Rytų Skirstomieji Tinklai” (RST).
According to the new business magazine “Versus,” as a news e-portal “JT Naujienos” reports,
it is hardly possible that Russian companies will stay overboard of the RST privatisation deal.
Back in 2003, during the initial sale of RST, “Vilniaus Prekyba” (VP) has already expressed its
interest in the Company but then became an owner of “Vakarų Skirstomieji Tinklai” (Western
Distributional Network of electricity).
In his interview to “Versus,” Žilvinas Marcinkevičius, a vice-president of VP, said that they
would make up their minds whether to participate in the sale only after the government announces it.
Nevertheless, he acknowledged that much time is required to prepare for participation in such a deal.
There have been talks on the market that because of VP’s links with VST (the latter and VP
have the same owners), it would probably co-operate with “MG Baltic” in acquiring RST.
“Hermis Capital“ (HC), an active investor into corporate shares both domestically and abroad,
claimed that the question about its participation in the RST sale has not yet handled. HC has recently
acquired oil extraction company “Geonafta.”
Although those “Versus” interviewees haven’t given a clear answer, most of them
acknowledged that RST is an attractive company to invest.
German “E.ON Energie,” the current owner of a 20.28% share stake in RST, was the only one
to concede its intentions to submit an offer for the rest of RST shares.
Based on “Versus” information, “Eesti Enegia” (EE) is another potential buyer of RST. EE is
controlled by Estonian government and was the only candidate to acquire RST in its initial sale in
2003. However, Lithuania’s government banned the deal three years ago.
It is quite likely that Latvian energy company “Latvenergo” will also take part in the
privatisation of RST.
Bankruptcy of "Ekranas" did not bring social crisis to PanevÄ—Ĺľys
September 7, 2006 (BNS, SEB Vilniaus Bankas) – The forecasts about social crisis in
Panevėžys due to bankruptcy of “Ekranas”, large manufacturer of TV tubes, did not came true.
Registered unemployment level reached 6% but no social confusion broke up, reads daily "PanevÄ—Ĺľio
rytas".
Currently, there are 4 333 unemployed persons registered in PanevÄ—Ĺľys, or roughly by 1 800
more compared to June, when around 4 000 of “Ekranas’” employees were dismissed from their jobs.
Ex-employees of “Ekranas” make up 40% of total unemployed in Panevėžys town and surroundings.
Over two months, 2307, or 60%, of fired employees were registered as unemployed in
PanevÄ—Ĺľys Labour Exchange. Out of this number, roughly 200 have already found a job in different
economic activities – manufacturing of electronic machinery, textiles, trade, catering, construction, food
processing etc. Another 700 will be employed right after they finish training courses.
September 19, 2006
2
The information and data used in this review is taken from external sources, i.e. news agency BNS, Bank of Lithuania, Statistics Lithuania, Ministry of Finance and other institutions. SEB Vilniaus Bankas does not
accept any responsibility for accuracy, validity and completeness of the information taken from external sources.
Litas and Euro Relative to US Dollar
LTL/USD
EUR/USD
2,73
2.73
1.2648
2,
2. 70
70
1.2788
2,
2. 67
67
1.2932
22 23 24 25 28 29 30 31 01 04 05 06 07 08 09 12 13 14 15 18 19
2006 08
2006 09
Main Macroeconomic and Financial Indicators of Lithuania
2000
2001
2002
2003
2004
2005
2006**
8.6
Real GDP (constant 2000 prices), annual change, %
3.9*
6.4
6.8
10.5
7.0
7.5
(IH)
37.512
Nominal GDP, LTL billion
45.848
48.563
51.948
56.772
62.440
71.084
(IH)
10.6
Current account deficit, % of GDP
5.9
4.7
5.1
6.8
7.7
7.0
(IQ)
12.7
Industrial production, annual change, %
2.2
16.0
3.1
16.1
10.3
7.3
(Jan-July)
5.672
Capital investment, LTL billion
6.553
7.824
8.124
8.678
10.097
12.186
(IH)
22.255
Exports of goods, LTL billion
14.193
17.117
19.117
21.263
25.819
32.767
(Jan-July)
29.190
Imports of goods, LTL billion
20.877
24.241
27.479
29.438
34.384
43.152
(Jan-July)
4.2
CPI, y-o-y change, e-o-p, %
1.4
2.0
-1.0
-1.3
2.9
3.0
(August)
3.4
HICP inflation, average annual, %
1.1
1.6
0.3
-1.1
1.2
2.7
(August)
1,519.7
Average monthly earnings, last quarter of a year, LTL
1,073.2
1,087.1
1,145.0
1,207.9
1,310.2
1,453.4
(IIQ)
6.4
Unemployment rate, ILO, average, %
16.4
17.4
13.8
12.4
11.4
8.3
(IQ)
5.19
Average interest rates on loans in litas, e-o-p, %
11.03
8.13
6.08
5.07
5.67
4.70
(July)
35.350
Loans of MFIs to residents except MFIs, e-o-p, LTL billion
6.114
7.289
8.851
13.122
18.608
30.248
(July)
Deposits of residents except MFIs with other MFIs, e-o-p,
26.724
8.660
10.215
11.532
13.585
17.787
24.225
LTL billion
(July)
19.518
Foreign direct investment, e-o-p, LTL billion
9.337
10.662
13.184
13.699
16.193
18.802
(IQ)
11.462
Official international reserves, e-o-p, LTL billion
5.435
6.677
8.013
9.528
9.109
11.104
(August)
31.964
M2 monetary aggregate, e-o-p, LTL billion
10.649
12.920
15.433
18.419
22.354
29.488
(July)
0.1***
Fiscal balance of public sector (GFSM 2001), % of GDP
-2.8
-2.1
-1.3
-1.2
-1.4
-0.4
(IQ)
16.32***
General government debt, e-o-p, % of GDP
27.75
26.57
25.34
21.22
19.48
18.75
(IH)
4
Industrial confidence index, last month of a period
-
-14
-14
-5
-18
-1
(August)
-1
Consumer confidence index, last month of a period
-
-26
-15
-12
-4
-3
(August)
* Due to data recalculation, temporarily GDP data up to 2000 is not strictly comparable to later years.
** Periods of latest data are given in parenthesis.
*** SEB Vilniaus Bankas forecast of nominal GDP for 2006 stands at LTL 82.031 billion.
September 19, 2006
3
The information and data used in this review is taken from external sources, i.e. news agency BNS, Bank of Lithuania, Statistics Lithuania, Ministry of Finance and other institutions. SEB Vilniaus Bankas does not
accept any responsibility for accuracy, validity and completeness of the information taken from external sources.
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