LEO LT AB or Lithuanian Electricity Organization ( lt , Lietuvos elektros organizacija) was a national energy

holding company A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...

Lithuania Lithuania (; lt, Lietuva ), officially the Republic of Lithuania ( lt, Lietuvos Respublika, links=no ), is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea. Lithuania ...

. The company owned shares of Lithuania's three major electric power production and distribution companies. It was established in early 2008 to raise funds for the construction of the planned

Visaginas Nuclear Power Plant Visaginas Nuclear Power Plant was a planned nuclear power plant project in Lithuania. It was proposed to be built at the site of the closed Ignalina Nuclear Power Plant, which was shut down on 31 December 2009 in accordance with Lithuania' ...

after close down of Ignalina Plant, and Lithuania–Sweden and Lithuania–Poland power connections. The decision to liquidate the company, mired in controversies and attacked by critics, was reached by the shareholder of LEO LT on 4 September 2009.

Formation

On 28 June 2007, Lithuania's parliament adopted a law on building a new nuclear power plant. The law also stipulated creation of a "national investor" to gain investments for the new nuclear power plant. The talks between the government, under Prime Minister

Gediminas Kirkilas Gediminas Kirkilas (, born 30 August 1951) is a Lithuanian politician who was Prime Minister of Lithuania from 2006 to 2008. Life and career Kirkilas was born in Vilnius in 1951. After returning from mandatory military service, from 1972 to 197 ...

, and privately owned NDX Energija, part of VP Market group, on the establishment of this "national investor" started on 30 November 2007. An agreement was reached on 20 December 2007, the

Seimas The Seimas of the Republic of Lithuania ( lt, Lietuvos Respublikos Seimas), or simply the Seimas (), is the unicameral parliament of Lithuania. The Seimas constitutes the legislative branch of government in Lithuania, enacting laws and amendmen ...

(Lithuanian Parliament) approved it on 1 February 2008, and President

Valdas Adamkus Valdas Adamkus (; born Voldemaras Adamkavičius; 3 November 1926) is a Lithuanian-American politician, diplomat and civil engineer. He served as the 5th and 7th President of Lithuania from 1998 to 2003 and again from 2004 to 2009. Adamkus' ...

signed the law on 12 February 2008. LEO LT started its official operations on 20 May 2008 with capital of 5 billion

litas The Lithuanian litas (ISO currency code LTL, symbolized as Lt; plural ''litai'' (nominative) or ''litų'' (genitive) was the currency of Lithuania, until 1 January 2015, when it was replaced by the euro. It was divided into 100 centų (genit ...

(approx. US$2.3 billion). According to the initial agreement, the shares of LEO LT were owned by the Republic of Lithuania (61.7%) and by private NDX Energija (38.3%). A small number of the shares (0.3–0.4%) were to be traded on the

Vilnius Stock Exchange The Nasdaq Vilnius is a stock exchange established in 1993 (''Vilnius Stock Exchange'', ''VSE'') operating in Vilnius, Lithuania. It is owned by Nasdaq Nordic, which also operates Helsinki Stock Exchange and Stockholm Stock Exchange. OMX Vilni ...

. The Lithuanian government transferred to LEO LT its holdings in

Lietuvos Energija Ignitis Group (Ignitis grupė AB; former name: Lietuvos Energija UAB) is a state-controlled energy holding company located in Vilnius, Lithuania. Its subsidiaries are involved in power and heat generation and distribution, natural gas trade and dis ...

(96.4%) and RST (Rytų skirstomieji tinklai – Eastern Power Grid Company, 71.34%), while NDX Energija transferred 97.1% of shares in VST (Vakarų skirstomieji tinklai – Western Power Grid Company). The government planned to offer to buy a 20.3% stake in RST owned by E.ON. The

Kruonis Pumped Storage Plant Kruonis Pumped Storage Plant (the KPSP) is located near Kruonis, Lithuania, east of Kaunas. Its main purpose is to provide grid energy storage. It operates in conjunction with the Kaunas Hydroelectric Power Plant. During periods of low demand ...

and

Kaunas Hydroelectric Plant The Kaunas Hydroelectric Power Plant, located on the Nemunas River about southeast of Centras (Kaunas), central Kaunas, Lithuania, was completed in 1960. Its dam created the Kaunas Reservoir. Owned by Lietuvos Energija, it operates in conjunction ...

were excluded from LEO LT and remained at the disposal of the state.

Dissolution

The formation of LEO LT was controversial and attracted much criticism. The main complains included that the new company would again monopolize the market which was divided only in 2002, that NDX Energija was selected as a partner without a public competition, and that the deal possibly violated the

Constitution of Lithuania The Constitution of the Republic of Lithuania ( lt, Lietuvos Respublikos Konstitucija) defines the legal foundation for all laws passed in the Republic of Lithuania. It was approved in a referendum on 25 October 1992. History Statutes of Lithu ...

and regulations of the

European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...

on monopoly in energy. In its decision of 2 March 2009, the

Constitutional Court of Lithuania Constitutional Court of the Republic of Lithuania (in lt, Lietuvos Respublikos Konstitucinis Teismas) is the constitutional court of the Republic of Lithuania, established by the Constitution of the Republic of Lithuania of 1992. It began th ...

ruled that while there were minor violations in the deal between the government and NDX Energija they were not substantial to merit voiding the agreement. The company was followed by continuous allegations of corruption. One commentator labeled the debacle as the "fraud of the century". Parliamentary elections at the end of 2008, brought a new government, under Prime Minister

Andrius Kubilius Andrius Kubilius (born 8 December 1956) is a Lithuanian politician who has been serving as a Member of the European Parliament (MEP) since 2019. He served as Prime Minister of Lithuania from 1999 to 2000 and again from 2008 to 2012.LR Vyriausio ...

, that did not support LEO LT. On 4 September 2009, the Seimas voted to liquidate LEO LT. The agreement with NDX Energija on division of assets was signed on 4 December 2009. The government would retain shares in all three companies (Lietuvos energija, RST and VST) and pay a compensation of 680 million litas to NDX – about the same amount NDX paid for its share of VST in 2003 and 2004. Thus the deal is interpreted as favorable to the government. According to reports in the media, NDX made about 500 million litas from its investment in VST. However, analysts also point out lost

opportunity costs In microeconomic theory, the opportunity cost of a particular activity is the value or benefit given up by engaging in that activity, relative to engaging in an alternative activity. More effective it means if you chose one activity (for example ...

: VST was valued at 2–3 billion litas in 2007.

References

{{Reflist, 2, refs= {{cite web, url=http://bernardinai.lt/straipsnis/2009-12-07-kestutis-girnius-pasakiska-simtmecio-aferos-pabaiga/36556 , first=Kęstutis , last=Girnius , title=Pasakiška "šimtmečio aferos" pabaiga , date=2009-12-07 , publisher=Bernardinai.lt, language=lt {{cite web, url=http://www.alfa.lt/straipsnis/10308342/?Leo.LT.dalybos..su.iskapotomis.akimis.ir.aukso.kapsais=2010-01-08_16-00 , title="Leo LT" dalybos – su iškapotomis akimis ir aukso kapšais , date=2010-01-08 , first=Marijus , last=Širvinskas , publisher=Alfa.lt, language=lt {{cite web , url=http://www.lrytas.lt/-12359882721235101029-konstitucinis-teismas-leo-lt-%C4%AFsteigimas-pa%C5%BEeid%C4%97-konstitucij%C4%85-bet-bendrov%C4%97s-naikinti-nereik%C4%97s-video-atnaujinta-18-val-45-min.htm , title=Konstitucinis Teismas: LEO LT įsteigimas pažeidė Konstituciją, bet bendrovės naikinti nereikės , date= , language=lt , access-date=2010-01-09 , archive-url=https://web.archive.org/web/20110927225813/http://www.lrytas.lt/-12359882721235101029-konstitucinis-teismas-leo-lt-%C4%AFsteigimas-pa%C5%BEeid%C4%97-konstitucij%C4%85-bet-bendrov%C4%97s-naikinti-nereik%C4%97s-video-atnaujinta-18-val-45-min.htm , archive-date=2011-09-27 , url-status=dead {{cite news, url=http://www.lrv.lt/main_en.php?id=en_aktualijos_su_video/p.php&n=601 , archive-url=https://web.archive.org/web/20080305022521/http://www.lrv.lt/main_en.php?id=en_aktualijos_su_video%2Fp.php&n=601 , url-status=dead , archive-date=2008-03-05 , title=Government Approves Establishment of Lithuanian Electricity Organisation LEO LT AB , publisher=Government of the Republic of Lithuania , date=2007-12-20 , accessdate=2008-02-25 {{cite news , url = http://uk.reuters.com/article/oilRpt/idUKL2048635420071220 , title = Lithuania agrees merged energy firm for nuclear plant , author = Nerijus Adomaitis , publisher =

Reuters Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world. The agency was estab ...

, date = 2007-12-20 , accessdate = 2008-02-25 {{cite news , author = Nerijus Adomaitis , url = https://www.reuters.com/article/mergersNews/idUSL2870020520070628 , title = Lithuania adopts law on new nuclear power plant , publisher =

, date=2007-06-28 , accessdate=2008-02-25 {{cite news , author = Nerijus Adomaitis, Patrick Lannin , url = http://uk.reuters.com/article/idUKL0179228820080201 , title = Lithuania vote gives boost to nuclear plant plan , publisher =

, date=2008-02-01 , accessdate=2008-02-25 {{cite news , url = http://uk.reuters.com/article/oilRpt/idUKWLB720720080214 , title = Fitch release on Central European Power Sector , publisher =

, date=2008-02-14 , accessdate=2008-02-25 {{cite web, url=http://www.lrytas.lt/-12601819471259506248-ndx-energija-prarado-kelis-milijardus-lit%C5%B3.htm, publisher=

Lietuvos rytas ''Lietuvos rytas'' (lit. 'Morning of Lithuania') is a Lithuanian daily newspaper. History and profile "Lietuvos rytas" was established in 1990 on a basis of newspaper "Komjaunimo tiesa". The paper is printed in Vilnius Vilnius ( , ; see also ...

, date=2009-12-07, title="NDX energija" prarado kelis milijardus litų, language=lt, access-date=2010-01-09, archive-url=https://web.archive.org/web/20110927225836/http://www.lrytas.lt/-12601819471259506248-ndx-energija-prarado-kelis-milijardus-lit%C5%B3.htm, archive-date=2011-09-27, url-status=dead {{cite web , url=http://www.bernardinai.lt/straipsnis/2009-09-07-didzioji-pilieciu-pergale-arba-kieno-yra-valstybes-pinigai/26447 , title=Didžioji piliečių pergalė, arba Kieno yra valstybės pinigai , date=2009-09-07, first=Dalius , last=Stancikas , publisher=Bernardinai.lt, language=lt Electric power companies of Lithuania Lithuanian companies established in 2007 Companies disestablished in 2009 2007 establishments in Lithuania 2009 disestablishments in Lithuania