The operator of the Vilnius waste treatment plant, Energesman, has filed two separate claims with the Vilnius Regional Court challenging the unlawful termination of the plant’s operation and modernization contracts. Energesman is asking the court to order VAATC to continue performing both contracts – effectively restoring the situation that existed before their termination.
Energesman is also asking the court to prohibit VAATC from claiming payments under the contract performance guarantees from the insurance company. The guarantees amount to approximately EUR 1.3 million, and VAATC has already requested that the insurer pay these amounts to VAATC.
“We are seeking to restore justice so that we can continue treating mixed municipal waste from the Vilnius region and modernize the plant as originally provided for in the contracts. This is the only way to prevent waste management costs for residents from increasing. Otherwise, waste management could cost residents two to three times more, as VAATC will not be able to operate the plant as efficiently – something we can already see in other regions, where municipalities manage waste at twice the cost,” says Algirdas Blazgys, CEO of Energesman.
With these claims, Energesman is challenging the termination of the contracts in court for the first time. Until now, the company had only applied to the court for interim protective measures.
“We hope that the court will examine the situation on its merits, assess all the circumstances and take into account the facts we have presented. They show that the actions of the Vilnius City Municipality and VAATC were coordinated unlawfully. For example, VAATC refers in its documents to decisions by the Vilnius City Emergency Operations Centre (ESOC) and its head that had not yet been officially adopted at the time. How could VAATC have known the contents of a document that did not yet exist?” asks Dr Paulius Miliauskas, partner at the law firm Miliauskas ir Lauraitytė.
The Vilnius City ESOC is currently headed by Dalius Krinickas, who is also a member of the VAATC Board. As the ESOC is expected to regulate relations between all market participants impartially, this raises legitimate questions about a potential conflict of interest.
“The takeover of the plant was carried out specifically on the basis of unilateral decisions by the Vilnius ESOC and its head. However, in this case, Vilnius municipal officials exceeded their powers. If the court confirms this, the entire takeover of the waste treatment plant will collapse, and those responsible should face the consequences through law enforcement,” emphasizes P. Miliauskas.
Energesman has already appealed the ESOC decisions to the Regional Administrative Court.
Until a final court ruling is issued, Energesman maintains that both the operation and modernization contracts for the Vilnius waste treatment plant remain valid. The company bases its position on the terms of the operation contract, which provide that the contract can only be terminated if two conditions are met: there are material grounds for termination and the other party is given 20 working days’ notice.
According to Energesman, the reasons cited by VAATC are not material, while the ESOC decisions deliberately discriminated against the company. The company also maintains that the accumulation of waste at the plant resulted from the Vilnius cogeneration plant being unable to accept waste for incineration, rather than from any fault on the part of the operator.
Meanwhile, VAATC itself failed to perform its obligations under the modernization contract by not paying Energesman the EUR 4.4 million initial payment within the contractual deadline.
VAATC has also not yet returned Energesman’s property located on the plant premises. The value of this property is approximately EUR 3 million. Some of Energesman’s property has been removed from the plant premises by VAATC without notifying the company.
According to preliminary estimates, Energesman’s losses will amount to approximately EUR 20 million. The losses may increase further for as long as VAATC remains in control of the plant.