Gazprom withdrawing claim against Republic of Lithuania on Kauno Termofikacijos Elektrine
Gazprom made a decision to withdraw one of its claims against the Republic of Lithuania. This claim was filed with the International Court of Arbitration of the International Chamber of Commerce (Paris) against the Lithuanian party in breach of contractual obligations, which consisted in imposing tariff regulation with regard to Kauno Termofikacijos Elektrine (KTE). The claim was withdrawn, as Gazprom closed the transaction on selling KTE shares at a price which enabled to refund investments and make a reasonable profit.
Background
In 2002 the consortium of Gazprom, UAB Dujotekana (Lithuania) and Clement Power Venture (USA) set up a Lithuanian company Kauno Termofikacijos Elektrine (KTE) with a view to take part in bidding for the set of assets of Kaunas Combined Heat and Power Plant. Gazprom was the majority stakeholder of KTE owning 99.5 per cent of its shares.
KTE was declared the winner of the bidding procedure and on March 31, 2003 the agreements were signed between KTE and Kauno Energija, specifying the terms of transactions, in particular, a Contract on heat energy sales. The document stipulated business conditions of Kauno Energija power supplies for a 15-year term in compliance with a specific pricing formula.
In violation of the Contract on heat energy sales and the Agreement on encouragement and reciprocal protection of investments between the Russian Federation Government and the Lithuanian Republic Government of June 29, 1999, the Lithuanian National Control Commission for Prices and Energy adopted a regulation On benchmark prices for KTE heat energy production, which fixed a mandatory rate flouting the specific formula stated in the Contract.
In 2012 Gazprom filed a relevant claim to the Court of Arbitration of the International Chamber of Commerce.
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