We worked on Saturday and Sunday to accelerate waste treatment and reduce the accumulated volumes of waste. However, increased capacity also requires higher operating costs, which the company has been forced to cover from its own resources, as VAATC still has not paid the outstanding invoices. The company’s shortage of working capital arose due to the inaction of VAATC and the City of Vilnius, as following the fire the company incurred EUR 4.2 million in additional costs and necessary investments, to which both VAATC and the City of Vilnius refused to contribute.
Worked through the weekend
“We worked throughout the entire weekend, sorting waste and sending it for energy recovery. We are making every effort to process the accumulated waste as quickly as possible,” says Algirdas Blazgys, CEO of Energesman.
On Friday, the waste sorting facility was visited by Eglė Paužuolienė, Acting Director of the Environmental Protection Department. The parties discussed how to address the current situation in order to eliminate any risk to the environment.
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Mayors refused to contribute back in winter
For almost a year and a half, Energesman has been processing waste in the fire-damaged facility, resulting in significantly higher operating costs. Over this period, the company has incurred EUR 4.2 million in additional expenses and necessary investments, which ultimately led to the accumulation of debt.
Using its own funds and the efforts of its employees, Energesman restored one of the facility’s three stationary sorting lines and erected a temporary shelter for employees working on waste sorting.
Throughout this period, the company has also been leasing additional mobile equipment used for sorting, shredding and baling waste. Energesman pays approximately EUR 100,000 per month from its own funds for the rental of this equipment.
In total, EUR 1.4 million (including VAT) has already been spent on leasing mobile equipment. These costs were fully financed by Energesman.
As the state of emergency continued for an extended period, Energesman asked VAATC, as the owner of the facility, to lease the equipment itself and provide it to the operator for use. However, this request was rejected.
The company also incurred approximately EUR 1 million (including VAT) in additional expenses while implementing various instructions issued by the Vilnius City Municipal Emergency Operations Centre (ESOC), including transporting waste to other regions, incinerating waste at more expensive facilities, and handling additional waste streams.
In addition, VAATC itself issued Energesman an invoice of EUR 300,000 (including VAT) for the temporary storage of 14,000 tonnes of unsorted waste at the Kazokiškės landfill. The decision to transport the waste to the landfill had likewise been made by the ESOC.
“Already in winter, we formally approached VAATC and the mayors of all eight municipalities, informing them that waste management costs had increased significantly following the fire. We invited VAATC and the mayors, as the owners of the facility, to allocate funds from their emergency reserves and assume at least part of these additional costs. However, they all refused. We were left to bear all the increased costs alone, despite the fact that the competent authorities confirmed that the fire was not caused by our actions,” emphasises A. Blazgys.
The mayors of the seven surrounding district municipalities stated that they could not allocate additional funding to a facility located outside their respective territories. Meanwhile, Vilnius Mayor Valdas Benkunskas refused on the grounds that the company does not own registered real estate in Vilnius, despite having allocated EUR 15,980 immediately after the fire.
VAATC refused to index the service fee
Under the plant operation agreement, the waste treatment fee that VAATC pays Energesman for waste management services is to be indexed annually to reflect increasing operating costs. This adjustment is to be made each year in March.
“As early as the winter of 2025, we approached VAATC requesting that the waste treatment fee be indexed by EUR 1.37 per tonne. We provided justification, pointing out that the minimum monthly wage had increased by 12 per cent since the beginning of the year. Nevertheless, VAATC refused to index the fee. As a result, throughout 2025, we lost EUR 330,000 in revenue, which would have been almost enough to pay the Vilnius cogeneration plant and prevent the debt from arising,” emphasises A. Blazgys.
Currently, VAATC pays Energesman EUR 53.81 per tonne (excluding VAT) for the treatment of mixed municipal waste and EUR 15 per tonne (excluding VAT) for food waste. This is the lowest waste treatment fee in Lithuania.
Operating at a loss while awaiting the reconstruction of the plant
The waste crisis in Vilnius will not be fully resolved until the fire-damaged waste sorting plant has been rebuilt, as mobile equipment cannot fully replace stationary sorting lines.
Only in May of this year did VAATC conclude a court-approved settlement agreement with Energesman, under which the parties agreed on the reconstruction of the plant building and the procurement of new equipment.
“Every process at VAATC took an extremely long time. A few years ago, the private sector managed to fully rebuild a waste treatment plant destroyed by fire within a year and a half. In contrast, VAATC spent an entire year merely agreeing on how the reconstruction would be carried out and how it would be financed. We made significant concessions to VAATC, assuming the majority of the investment costs for both the building and the new equipment, simply to move the process forward as quickly as possible. Every single working day spent operating in the fire-damaged facility meant financial losses for us,” says A. Blazgys.
Even before the settlement agreement was confirmed, in March this year, Energesman had already begun reconstructing the plant building. By now, new support columns and steel connecting beams have been installed. All that remains is to install the roof and wall cladding, which has already been manufactured and delivered to the plant site.
Energesman has already invested approximately EUR 1 million in rebuilding the plant building.
“We suspended the construction works in June after VAATC’s management changed and they stopped honouring the agreements that had been reached. However, all materials required to complete the reconstruction are ready, and the contractors could finish the work within one month. All that is needed is to clear the site and ensure funding for payment,” says A. Blazgys.
Public procurement launched for the new equipment
Energesman has already spent EUR 500,000 of its own funds on the initial orders for the new sorting equipment.
VAATC announced an international public procurement procedure for the acquisition of the new plant equipment (Procurement ID: 5728395). Three bidders submitted proposals. Energesman offered the lowest price of EUR 11.75 million. The second-lowest bid, amounting to EUR 15.55 million, was submitted by UAB Motecha together with Huttechnika sp. z o.o., while the third bid of EUR 15.74 million was submitted by UAB Azortum.
On 15 May this year, VAATC and Energesman signed the plant modernisation agreement. Under the agreement, VAATC undertook to transfer the first payment of EUR 4.4 million no later than 26 June. However, the payment was never made, and on 10 July, VAATC informed Energesman that it was terminating the agreement unilaterally.
“We have already completed 90 per cent of the plant design, paid advance payments to some of the equipment manufacturers, and carried out trials with the selected equipment, which we also had to finance from our own resources. We trusted VAATC, the law, and our democratic state to ensure that signed agreements would be honoured. It turns out that VAATC is above everything else – for some reason, neither contractual obligations nor the law seems to apply to them,” says A. Blazgys.
Preparations will have to start from scratch
The shortage of working capital was further aggravated by seasonality. During the heating season, significantly larger volumes of waste are sent for energy recovery, resulting in substantially higher payments to the Vilnius cogeneration plant. The company also generated less revenue from the sale of recyclable materials, as fewer materials could be recovered due to the fire-damaged equipment.
“Day after day, we were left alone to finance the increased day-to-day costs of waste management, invest in rebuilding the plant building and designing the new equipment. Throughout this entire period, waste generated in the Vilnius region continued to be treated. We did everything we possibly could to ensure that residents would not experience any inconvenience and that the plant could be rebuilt as quickly as possible,” says A. Blazgys.
All preparatory work had already been completed to enable a modern waste sorting plant to begin operating in Vilnius in March next year.
“All that was required was for VAATC to honour its contractual commitments, pay invoices on time or promptly approve our request to use factoring. It is difficult to understand why there is such unwavering belief that destroying everything will somehow lead to a better outcome. We do not live in a fairy tale – we live in reality. The work of the past year and a half will now have to start all over again,” notes A. Blazgys.
Last year, Energesman recorded a net loss of EUR 560,000, while the company’s revenue amounted to EUR 11.67 million. In previous years, the company had operated at a modest profit and therefore had no opportunity to accumulate a substantial financial reserve.
All profits generated by the company were reinvested in innovative solutions aimed at reducing the amount of waste disposed of at the Kazokiškės landfill. Even after the fire, less than 10 percent of non-recyclable waste was sent to landfill, although under the original agreement with VAATC the company was entitled to landfill up to 19 percent of waste. Following the reconstruction of the plant, the parties had agreed to reduce the share of waste sent to the Kazokiškės landfill to no more than 5 percent.