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A new, modern mixed municipal waste sorting plant for the Vilnius region was planned to be completed in Vilnius by March 2027. The facility was designed to sort waste using 12 robots and other state-of-the-art automated equipment. It was set to become the most advanced waste sorting plant in the Baltic States and one of the most modern facilities of its kind in Europe.

By now, 90% of the equipment design has already been completed, with 10 international suppliers from Europe and the United States committed to manufacturing the required equipment.

A plant worth tens of millions of euros

A total of EUR 11.75 million was planned to be invested in new equipment for the plant, with an additional EUR 2 million allocated for the building. The new equipment was also eligible for EUR 4 million in allocated European Union funding.

The total value of the new sorting plant would have reached nearly EUR 15 million. The facility and its equipment would have belonged to VAATC, while VAATC’s own investment would have amounted to only around EUR 0.5 million.

“Energesman” has already invested EUR 0.5 million in the initial equipment orders. The company has also paid an additional EUR 1 million for the reconstruction of the plant building and construction materials.

Partners: We do not understand what is happening

“The processes we are currently witnessing in Lithuania are concerning and do not create confidence. I cannot understand how a contract with a company that won an international public procurement procedure can be brought to a standstill so easily,” says Morten Christensen, Head of Danish company MM Recycling ApS.

The Danish company designed the configuration and layout of the new plant’s equipment to enable fully automated waste sorting – with human supervision only, without manual labour as was previously required.

“We are approximately 90% finished with the 3D design plan, which clearly defines the location and parameters of each piece of equipment. Only minor adjustments remain to be made, but the main work has already been completed,” says M. Christensen.

The planning process for the plant began already in autumn last year, when preparations started for participation in the public procurement procedure, allowing the required scope of equipment to be accurately assessed when preparing the bid.

Equipment already tested and AI trained

The manufacturing of the equipment has already been ordered from 10 international partners in the United States, Germany, the United Kingdom, France, Spain, Finland and Latvia.

“We have already paid advance payments to many of the equipment manufacturers. We have also conducted real-life tests with the selected equipment and actual waste brought to the plant to ensure that the solution works as intended,” says Algirdas Blazgys, CEO of “Energesman”.

The new sorting line was designed so that robotic arms would first remove the heaviest waste items and, at the final stage, the lightest ones. The robots would sort different types of plastics, separate paper, cardboard, glass and various metals.

“Even before the fire, together with the Lithuanian company ‘Softeta’, we developed an artificial intelligence-based programme that was trained to recognise different types of waste and count them – examples of how it worked can be seen on our website. We had planned to apply this already trained artificial intelligence solution in the new modern sorting line,” says A. Blazgys.

Designed to become one of the most advanced

“The Vilnius waste sorting plant was meant to become a flagship project in Europe. Once all the documents were finally signed, we were eagerly waiting for the equipment to be manufactured and installation work to begin,” says M. Christensen.

The sorting line was designed to process 230,000 tonnes of mixed municipal waste per year. Approximately 220,000 tonnes of such waste are generated annually in the Vilnius region.

The new line would have enabled the recovery of significantly more recyclable secondary raw materials than had previously been possible through manual sorting. These materials would have been much cleaner and easier to recycle.

“It would have reduced the amount of waste sent to landfill to a minimum and also decreased the need for waste incineration, as more materials could have been recycled. All this new equipment would have become the property of the residents of the Vilnius region through VAATC, which is and would have remained the owner of the plant,” notes A. Blazgys.

This would save residents’ money, because, for example, reducing the amount of waste going to landfill by 5% (11,000 tons) would save EUR 1.6 million, since the cost of disposing of one ton of waste in a landfill is EUR 147.85.

Contract signed, but client changed its decision

However, all processes related to the modernisation of the waste sorting plant had to be suspended after VAATC failed to transfer the EUR 4.4 million advance payment by 26 June, as required under the signed public procurement contract.

VAATC could have made the payments directly to the suppliers, but it did not do so either.

At VAATC’s request, “Energesman” signed tripartite agreements with all suppliers and submitted them to VAATC; however, VAATC never signed these agreements on its side.

VAATC announced the international public procurement procedure for the renewal of the waste sorting plant’s equipment in December last year (procurement ID: 5728395).

Three participants submitted bids. The lowest bid was submitted by “Energesman” – EUR 11.75 million. The second-ranked bidders were UAB “Motecha” and “Huttechnika sp. z o.o.” with an offer of EUR 15.55 million, while the third-ranked bidder was UAB “Azortum” with an offer of EUR 15.74 million.

Restarting the public procurement process for the equipment would result in a delay of at least one year. It would also mean that the already allocated European Union funding could no longer be used, while the overall cost of establishing the plant would increase.

“We have the greatest experience in Lithuania in sorting mixed municipal waste. For more than a year, we managed to handle waste even in the plant damaged by the fire. We invested millions of euros and countless hours into restoring a new, advanced facility – it is simply impossible to understand how one person, who entered the waste management sector only a month ago, can so easily destroy everything. This should not be happening – this is not normal,” says A. Blazgys.

On average, 4,200 tonnes of waste are generated in the Vilnius region every week. If collected in one place, this amount would form a pile 20 metres wide, 140 metres long, and 10 metres high. Therefore, the waste accumulated in front of the Vilnius Regional Mixed Waste Sorting Plant represents only around ten days’ worth of waste discarded by residents of Vilnius and surrounding districts. It could be processed within a few weeks if the system operated without artificial disruptions.

Visible waste accumulated over just a few days

“We understand how alarming large waste piles may look, especially to those who have never worked in the waste management sector and do not know how much waste residents generate. In reality, these are just several days’ worth of mixed municipal waste discarded by residents of the Vilnius region. We can process this amount very quickly,” says Algirdas Blazgys, CEO of Energesman.

In total, residents of the Vilnius region generate 220,000 tonnes of mixed municipal waste annually, meaning that approximately 4,200 tonnes of mixed waste are generated every week. This is equivalent to around 500 waste collection trucks per week.

“Following the fire, we have already cleared hundreds of similar waste piles – waste is constantly moving; it is an ongoing process that operated as smoothly as could reasonably be expected in a damaged plant. The system started experiencing disruptions approximately one month ago, when the head of VAATC changed,” notes A. Blazgys.

Failure to pay for services on time

The waste accumulated in front of the plant could be managed within a few weeks – all that is needed is for VAATC to pay for the services provided and for waste incineration at the Vilnius Cogeneration Power Plant to resume.

Since 19 June, Energesman has not received any payments from VAATC, although previously invoices were settled within an average of 13.8 days.

VAATC still owes EUR 0.23 million for services provided in May, while payments exceeding EUR 1 million remain outstanding for services provided in June.

Article 5(1) of the Law on the Prevention of Late Payment in Commercial Transactions stipulates that public sector institutions must make payments for goods supplied, services provided, and works completed no later than within 30 calendar days.

“The operating agreement we signed with VAATC 12 years ago provided for a 60-day payment period. However, during this time, the law changed, requiring public sector entities to settle payments within a shorter timeframe. The law takes precedence over the contract, meaning that VAATC is currently simply violating the law,” says attorney-at-law Dr Paulius Miliauskas, partner at the law firm Miliauskas ir Lauraitytė.

A longer 60-day payment period is only permitted if the contracting authority provides justification for such a need. Energesman requested that VAATC justify the extended payment period, but no explanation was provided.

Earlier, Energesman also requested that VAATC amend the agreement and change the payment term to 30 days, as required by law. However, VAATC refused to do so.

VAATC has also refused to confirm Energesman’s ability to use factoring services for issued invoices.

Failure to pay for equipment

VAATC also failed to make timely payments for the new equipment ordered for the plant. The first payment of EUR 4.4 million was due by 26 June.

Under the plant modernisation agreement, VAATC had the option to initiate, within three days, that the first payment be made directly to suppliers rather than to Energesman. However, VAATC did not do so.

“After realising that it had missed the deadline, VAATC started demanding that we provide a bank guarantee, even though this was not included in the public procurement requirements or the signed agreement. Such a guarantee would cost approximately EUR 0.5 million, and these costs were not included in our bid,” says A. Blazgys.

After Energesman refused to provide an unplanned guarantee, VAATC began requiring that tripartite agreements be signed between VAATC, Energesman, and the equipment manufacturers.

Energesman agreed and collected signatures from all 10 international suppliers, then submitted the agreements to VAATC. However, VAATC never signed the agreements on its side.

Moreover, VAATC amended the wording of the tripartite agreements several times, meaning that signatures had to be collected repeatedly. Almost all equipment manufacturers are based abroad – in the United States, Germany, the United Kingdom, France, Spain, Latvia, and Finland.

“It was difficult for suppliers to understand what we were asking from them and why the same agreement had to be signed several times. In this situation, Lithuania did not leave the best impression on major international manufacturers,” recalls A. Blazgys.

Regardless of the form of payment – whether made directly to suppliers, following the signing of tripartite agreements, or paid to Energesman – VAATC was required to make the first payment within 30 days of signing the agreement. The deadline expired on 26 June. No payments were made to anyone.

Board misled

“We believe that when the VAATC Board made the drastic decision last Friday to terminate all agreements, it relied on incomplete and inaccurate information. Therefore, we invite both the head of VAATC and the Board to meet and discuss the situation – to look for solutions that are in the best interests of residents. I believe we can still find them,” says A. Blazgys.

As attorney-at-law Dr P. Miliauskas emphasises, contract preservation is an established principle in law, meaning that parties to an agreement should first seek to resolve disagreements that arise rather than immediately terminate agreements.

“In business, it is standard practice to cooperate in good faith with service providers, maintain partnership-based relationships, and solve emerging problems together, because both parties understand that this is the only way to achieve the best outcome. In this case, we see a rigid, formal, and demanding approach, which has led to the situation we are facing today,” says Dr P. Miliauskas.

Vilnius City Municipality owns 76.51% of VAATC’s shares, while the remaining shares are held by other municipalities of the Vilnius region.

On Tuesday, 14 July, a group of approximately 20 people, accompanied by representatives of UAB VAATC, their lawyer and a bailiff, attempted to gain unlawful access to the Vilnius Regional Mixed Municipal Waste Sorting Facility operated by our company. Police were called to the scene. The facility’s operations were disrupted for nearly three hours.

“We allowed only a VAATC representative, their lawyer and the bailiff to enter the facility so they could inspect the premises and assess the equipment, as they are entitled to do. However, no one else was admitted, because the operating agreement remains fully in force and VAATC is obliged to comply with it,” says Algirdas Blazgys, CEO of our company.

Under the operating agreement signed between VAATC and Energesman, the contract may be terminated unilaterally only in the event of a material breach and only after providing 20 business days’ written notice. No such notice was given, and the reasons cited by VAATC cannot be regarded as material breaches of the agreement.

Daiva Ušinskaitė-Filonovienė, the lawyer representing VAATC, also stated that VAATC sought to take over the facility based on an order issued by Eglė Bernotavičienė, Head of Emergency Operations of the Vilnius City Municipality. However, she was unable to identify any specific provision in the order that would grant such authority.

“There is simply no such provision in the order. We are all capable of reading, and the order is a public document. Therefore, VAATC’s actions are unlawful,” emphasizes Dr. Paulius Miliauskas, Partner at the law firm Miliauskas ir Lauraitytė.

It is also worth noting that Eugenijus Filonovas, the husband of VAATC’s lawyer D. Ušinskaitė-Filonovienė, is presented on VAATC’s website as an independent member of the company’s Board. This raises the question of whether a conflict of interest may exist.

After failing to gain access to the facility, VAATC representatives called the police to the scene.

Upon arrival, the police did not intervene in the dispute, stating that the matter concerns civil legal relations. They also noted that the state of emergency in Vilnius has been in effect for more than a year, since 27 April 2025, when a fire broke out at the facility after an item discarded among the waste caught fire.

“This situation demonstrates VAATC’s incompetence and legal nihilism. We live in a state governed by the rule of law, where everyone – including public institutions that are expected to act in the interests of the state and its residents – must comply with the law and honour their contractual obligations,” says Dr. Miliauskas.

The group arrived at the facility at 9:00 a.m. and left before noon. As a result, operations at the waste sorting facility were disrupted for nearly three hours.

Vilnius City Municipality owns 76.51% of VAATC’s shares, while the remaining shares are held by other municipalities of the Vilnius region.

On Friday, July 10, we received an order signed by Eglė Bernotavičienė, Head of Emergency Operations of the Vilnius City Municipality, instructing that waste management operations be transferred to Ecoservice.

However, the official municipal document clearly contained visible comments from an Ecoservice employee.

“It raises an obvious question: who actually drafted this order, and who encouraged our public institutions to act with such extraordinary speed?

We consider this a case of unfair competition and preferential treatment of companies favoured by Vilnius politicians,” says Algirdas Blazgys, CEO of our company.

Mixed municipal waste continues to be delivered to the Vilnius Regional Mixed Waste Sorting Plant, where it is being received and processed by our employees. Under the operating agreement, UAB “VAATC” was required to provide 20 business days’ prior notice before terminating the contract. It failed to do so. According to preliminary estimates, the disruption caused in the waste management sector will result in losses exceeding EUR 50 million, costs that will ultimately be borne by residents.

Waste reception continues

“Waste has continued to be delivered to the plant throughout the weekend and today, and our employees remain at work,” says Algirdas Blazgys, CEO of our company.

During the weekend, bailiffs visited the facility to document the ongoing waste reception and the current situation. They were invited both by us and by VAATC.

Waste reception and treatment continue uninterrupted. Approximately 30 employees work in each shift, with operations running in two shifts every day. Waste is accepted daily from 6:00 a.m. until 11:00 p.m.

VAATC failed to comply with the required notice period

Under the plant operating agreement, VAATC was obliged to provide 20 business days’ notice before terminating the contract unilaterally. During that period, the operator should have been given an opportunity to remedy any alleged deficiencies.

“We never received any notice of the intended contract termination,” emphasises A. Blazgys.

On the contrary, VAATC formally accepted the services we provided in both May and June as satisfactory. Invoices were issued for these services in accordance with the agreed acceptance and delivery acts.

“However, VAATC has still not paid for the services we provided in June, while payment for May services has only been made partially, despite the Lithuanian Law on Public Procurement requiring contracting authorities to settle invoices within no more than 30 days,” says A. Blazgys.

As of 13 July, VAATC still owed EUR 220,000 for services provided in May, although payment was due by 30 June.

VAATC also failed to fulfil its obligations under the signed plant modernisation agreement by failing to pay EUR 4.4 million by 26 June, funds intended as advance payments to equipment manufacturers.

The damage will affect both the region and Lithuania

Preliminary estimates indicate that the disruption caused by VAATC will cost residents of the Vilnius region more than EUR 50 million.

Currently, we process mixed municipal waste at EUR 53.81 per tonne (excluding VAT), whereas other waste treatment providers charge approximately EUR 120 per tonne (excluding VAT). Based on an annual volume of 220,000 tonnes, the cost of waste treatment in the Vilnius region will increase by EUR 14.56 million.

Waste-to-energy costs will also increase. We currently pay EUR 32.50 per tonne for waste incineration at the Vilnius Combined Heat and Power Plant. If VAATC assumes the contract, the price regulated by the National Energy Regulatory Council (VERT) of EUR 48.80 per tonne would apply. With approximately 125,000 tonnes incinerated annually, this would add EUR 2.04 million in yearly costs.

The planned modernisation of the plant will become EUR 15 million more expensive because the already approved European Union funding and our commitment to finance the investment during the remaining operating period will no longer apply.

Food waste treatment costs will also rise significantly. We currently process food waste for EUR 15 per tonne, while residents in the Kaunas region pay EUR 138.62 per tonne. Processing approximately 12,000 tonnes of food waste annually would therefore cost an additional EUR 1.48 million each year.

Our company is the only certified producer of Solid Recovered Fuel (SRF) in Lithuania, supplying SRF produced from waste to AB Akmenės cementas.

“Both the certification and the supply contract belong to us, not to VAATC,” notes A. Blazgys.

Without our operations, the waste required for SRF production would instead be disposed of in landfill, generating an additional EUR 2.1 million in annual costs.

This would also worsen air quality for residents living near the Kazokiškės landfill and negatively affect Lithuania’s environmental performance, potentially exposing the country to penalties from the European Commission.

Recycling rates for textiles and plastics would also decline, as our company is currently developing new technologies for recycling these waste streams.

The decision took less than an hour

“Based on our correspondence with VAATC, we can see that Friday’s VAATC Board meeting lasted less than an hour. The termination grounds sent to us were purely formal and lacked any specific justification. We asked to attend the meeting and present our position, but this request was rejected. Can a decision with such significant consequences for Lithuania’s entire waste management system really be made without discussion or proper assessment?” asks A. Blazgys.

Until now, any decision within VAATC regarding documents, requests or proposals typically took a considerable amount of time.

The Vilnius City Municipality owns 76.51% of VAATC’s shares, while the remaining shares are held by other municipalities of the Vilnius region.

The decision adopted today by the Vilnius Regional Waste Management Centre (UAB VAATC) to terminate the operating agreement for the Vilnius Regional Mixed Municipal Waste Sorting Facility with our company is unlawful, non-transparent, and contrary to the principles of fair competition. We will challenge this decision in court.

“No consideration is being given to the interests of residents. It is already clear that waste management costs for households in the Vilnius region will increase, while the restoration of the waste sorting facility will be delayed by several more years,” says Algirdas Blazgys, CEO of our company.

We learned about the decision, adopted by the VAATC Board on the afternoon of Friday, 10 July, through the media.

Once we receive the official documentation, we will undoubtedly challenge the decision before the court.

“We have fulfilled the operating agreement properly and have been managing mixed municipal waste from the Vilnius region for nearly ten years. We regard this contract termination as an act of unfair competition and preferential treatment of companies that are more politically favoured,” Blazgys emphasises.

We later received a notification from VAATC stating that the waste management services would be transferred to UAB Ecoservice.

“According to our calculations, waste management costs for residents will increase by at least EUR 33.5 per household per year. This is because we have been providing the service at EUR 53 per tonne, whereas other waste management companies seeking to take over the service are currently charging around EUR 120 per tonne,” Blazgys notes.

Should the court rule that the decision was unlawful, residents will ultimately also bear the cost of any damages awarded.

The Vilnius City Municipality owns 76.51% of VAATC’s shares, while the remaining shares are held by other municipalities of the Vilnius region.