Tag: Energesman; waste crisis; Algirdas Blazgys; Vilnius

Waste management costs for residents of the Vilnius region are increasing by at least EUR 12 million per year, and this amount is likely to reach EUR 15 million because VAATC is not disclosing all contracts, making it impossible to verify the exact cost of waste management. The waste sorting plant can be rebuilt only within approximately two years, and its reconstruction is expected to cost around EUR 20 million.

As a result, approximately EUR 50 million in additional funds will be spent over two years. This equals about EUR 57 per resident.

Waste management costs have doubled

“The mayor’s promises have turned into a torch. The decisions that have been made contain no business logic whatsoever – they are clearly not beneficial to residents. The question then arises: who do they benefit, and whose interests are VAATC and the Mayor of Vilnius representing?” asks Algirdas Blazgys, CEO of Energesman.

On Friday, VAATC announced that waste management currently costs EUR 100–110 per tonne. However, there is currently no possibility to verify this figure because VAATC has not disclosed the annex to its contract with the Vilnius Combined Heat and Power Plant (VKJ), which specifies the waste incineration tariff.

It is also unknown how much the treatment of the biological fraction of waste currently managed by VAATC costs.

Based on the publicly available value of the VKJ contract and the planned volume of waste to be incinerated, the incineration cost amounts to EUR 73 per tonne (contract value EUR 2.2 million, planned incineration volume 30,000 tonnes).

In that case, the total waste management cost rises to EUR 130 per tonne.

“If we take the average between our calculations and those of VAATC, we arrive at EUR 120 per tonne. That means an additional EUR 15 million per year. Exactly as we have said from the very beginning,” Blazgys calculates.

Until now, Energesman was paid EUR 53.81 per tonne for full waste management, including incineration and treatment of the biological fraction. Approximately 220,000 tonnes of waste are generated annually in the Vilnius region.

Rebuilding the plant will also cost more

On Friday, the mayor publicly acknowledged that lower waste management prices can be restored only after the plant is rebuilt.

Even if VAATC were to announce a new public procurement tender immediately, the entire process until the commissioning of new equipment would take at least two years. It may take even longer due to legal disputes arising from the termination of the already signed modernization agreement with Energesman.

Throughout this period, waste management will remain more expensive, resulting in approximately EUR 30 million in additional expenditure.

The reconstruction itself will also become more expensive. In the public procurement announced by VAATC in December, other bidders submitted offers of approximately EUR 16 million. UAB Motecha together with Huttechnika sp. z o.o. offered to manufacture new equipment for EUR 15.55 million, while UAB Azortum offered EUR 15.74 million.

“By the time a new procurement procedure is completed, taking into account high inflation and reduced competition, the price will certainly increase to around EUR 20 million. And residents themselves will have to pay this entire amount, because the already allocated EUR 3.6 million in European Union support will be lost, along with our commitment to reimburse VAATC for the full amount invested in the equipment plus interest,” Blazgys emphasizes.

Under the modernization agreement signed on 15 May, Energesman had offered to install new equipment for a significantly lower amount – EUR 11.75 million – and subsequently repay this amount to VAATC over the remaining operating period while paying 6% interest.

“If we add together two years of higher waste management costs and the increased reconstruction costs, we arrive at EUR 50 million in additional expenditure. The actual amount will be even higher because VAATC will not be able to operate the waste plant as efficiently as a private company can. This is due both to operational capabilities and to bureaucratic procedures,” Blazgys says.

The plant could be operated illegally

Serious questions arise as to whether VAATC can operate the waste plant at all without an Integrated Pollution Prevention and Control (IPPC/TIPK) permit. The currently valid permit has been issued to the plant operator, UAB Energesman.

Obtaining a new IPPC permit may take between one and three years. Until then, operations would be conducted illegally, in violation of the Environmental Protection Law.

Under Energesman’s existing IPPC permit, the company is authorized to store up to 24,000 tonnes of waste at the plant. This limit has never been exceeded. According to official GPAIS waste accounting data, 18,800 tonnes of waste were present at the plant on 23 July. More than 10,000 tonnes of this volume had already been sorted and baled and were ready for incineration.

VAATC took over operation of the plant on 24 July.

As blogger Skirmantas Malinauskas publicly stated on Sunday, the takeover of the Vilnius mixed waste plant is part of an ongoing redistribution of the waste market. Competitors are currently in a particularly advantageous position to take over the plant because all preparatory work for rebuilding the new waste sorting facility has already been completed.

Calculations

(120 − 53.81) × 220,000 = EUR 14.56 million

(110 − 53.81) × 220,000 = EUR 12.36 million

VAATC does not hold an Integrated Pollution Prevention and Control (IPPC/TIPK) permit required to operate the Vilnius mixed waste treatment plant. VAATC is currently managing waste in violation of the Environmental Protection Law. Obtaining a new IPPC permit may take between one and three years, and until then the activities would be carried out unlawfully. Today, the plant was not operating because its electricity supply had been disconnected.

Existing permit will not be transferred

The currently valid IPPC permit has been issued to the plant operator, UAB Energesman, with whom VAATC still has a valid operating agreement.

“We will certainly not agree to transfer our existing IPPC permit to VAATC, which has taken over the plant. They will have to start the entire permitting process from the beginning. This will be a long and complicated process that will take several years,” says Algirdas Blazgys, CEO of Energesman.

Decisions adopted by the Vilnius City Emergency Operations Centre have lower legal authority and cannot justify VAATC’s unlawful activities carried out without a pollution permit required under the Environmental Protection Law.

Electricity supply disconnected

This morning, electricity was disconnected at the Vilnius waste sorting plant and the facility was completely shut down.

To date, VAATC has not returned all assets located at the plant that belong to Energesman. Their value amounts to approximately EUR 3 million and includes shredders, magnets, bioconversion equipment, construction materials, computers, and other property.

The value of Energesman’s assets located at the plant exceeds the value of the equipment owned by VAATC itself, which amounts to only about EUR 2 million.

“Today VAATC allowed employees to retrieve part of their personal tools and tools belonging to the company. These tools had been stored in a container that VAATC representatives unlawfully broke into. Some tools were missing and had been used without authorization by VAATC representatives,” says Blazgys.

VAATC also unilaterally moved one of Energesman’s shredders outside the plant territory, where the area is not protected, without informing the company.

Waste is being managed at significantly higher cost

The independent civic public procurement analysis initiative *Viešpirkiai* has published contracts concluded by VAATC with Ecoservice, Ekonovus, and the Vilnius Combined Heat and Power Plant.

Under these contracts, VAATC has committed to pay EUR 62.8 per tonne (excluding VAT) to Ecoservice and EUR 77 per tonne (excluding VAT) to Ekonovus for waste treatment.

An additional EUR 73 per tonne (excluding VAT) is paid to the Vilnius Combined Heat and Power Plant for waste incineration.

Additional costs are also incurred for treatment of the biological fraction of waste in the Vilnius MBA tunnels currently operated by VAATC, although the exact price of this service has not been disclosed.

As a result, the total waste management cost may reach EUR 130 per tonne, whereas Energesman previously managed waste for EUR 53.81 per tonne (excluding VAT), including incineration and treatment of the biological fraction.

The publicly accessible website Viespirkiai.org also lists additional contracts concluded by VAATC for the rental of loaders, screeners and lifting equipment, waste transportation, security services, cleaning services, and public relations services. The total value of contracts concluded during July has already reached EUR 10.58 million.

“It is obvious that waste generated by residents of the Vilnius region is already being managed at more than twice the previous cost. VAATC is wasting reserves accumulated from residents’ payments that should have been used for investment and improvement of the waste management system – this is criminal,” Blazgys emphasizes.

As blogger Skirmantas Malinauskas publicly stated on Sunday, the takeover of the Vilnius mixed waste plant is part of an ongoing redistribution of the waste market. Competitors are currently in a particularly advantageous position to take over the plant because all preparatory work for rebuilding the new waste sorting facility has already been completed.

The independent civic public procurement analysis initiative “Viešpirkiai” has published waste management contracts concluded by VAATC with Ecoservice, Ekonovus, and the Vilnius Combined Heat and Power Plant. The price amounts to EUR 135.8 per tonne (excluding VAT) for waste treatment and incineration. If such prices continue to be paid, annual waste management costs for residents will increase by approximately EUR 18 million.

VAATC misled the public about contract negotiations

The price currently paid by VAATC for waste management is nearly three times higher than the price previously paid to Energesman, which managed waste for EUR 53.81 per tonne excluding VAT, including incineration. Approximately 220,000 tonnes of waste are generated annually in the Vilnius region.

The contracts were concluded on 16–17 July. Since then, VAATC has deliberately avoided disclosing the prices and publicly claimed that the contracts were still under negotiation.

“We are witnessing yet another false statement by VAATC – one of many. This is a desperate attempt to justify an artificially created waste crisis. It is evident that these actions are not in the interests of residents, because waste management costs are increasing. It is only a matter of time before these higher costs appear in residents’ utility bills,” says Algirdas Blazgys, CEO of Energesman.

VAATC concluded separate contracts for waste treatment and waste incineration. It committed to pay EUR 62.8 per tonne (excluding VAT) to Ecoservice and EUR 77 per tonne (excluding VAT) to Ekonovus for waste treatment.

An additional EUR 73 per tonne (excluding VAT) will be paid to the Vilnius Combined Heat and Power Plant for waste incineration.

When waste is treated by Ecoservice, the total cost of waste treatment and incineration reaches EUR 135.8 per tonne (excluding VAT) (EUR 62.8 + EUR 73).

The publicly accessible website viespirkiai.org also lists additional contracts concluded by VAATC for the rental of loaders, screeners and lifting equipment, waste transportation, security services, and cleaning services. The total value of contracts concluded during July has already reached EUR 10.58 million.

“VAATC has already committed to paying these millions to suppliers – and this is residents’ money. None of these expenses would have arisen if VAATC had complied with the signed settlement and modernization agreements and had not artificially created this crisis,” Blazgys emphasizes.

VAATC is misleading the public

VAATC’s public claims that 30,000 or even 40,000 tonnes of waste have accumulated on the plant site do not correspond to official data.

On 23 July, the GPAIS waste accounting system recorded 18,800 tonnes of waste. Last week, specialists from the Environmental Protection Department visited the plant and confirmed by drone inspection that approximately 20,000 tonnes of waste were present at the facility.

VAATC unlawfully took over the plant on 24 July. Until that date, Energesman continued to process waste and deliver it for energy recovery. Exact daily quantities of accepted and incinerated waste were reported to the National Crisis Management Centre.

“VAATC is deliberately misleading and frightening the public in order to justify its takeover of waste management operations and, according to information made public, to redirect waste flows to interested business groups,” says Dr. Paulius Miliauskas, partner at the law firm Miliauskas ir Lauraitytė.

According to the lawyer, there are reasonable grounds to question whether Marius Švaikauskas is properly performing his duties as head of VAATC.

“He is undermining the MBA plant modernization project that is important to the residents of the Vilnius region and, within a very short time since taking office at VAATC, is committing enormous amounts of money that belong to the region’s residents. Under the law, the activities of the head are supervised by the VAATC Board. The question arises whether the Board is properly performing its duties if funds are being spent recklessly right under its nose. The Board is obliged to act in the interests of all residents of the region,” Miliauskas notes.

As blogger Skirmantas Malinauskas publicly stated on Sunday, a redistribution of the waste market is currently taking place. Competitors are in a particularly favorable position to take over the plant because all preparatory work for rebuilding the new waste sorting facility has already been completed.

Calculation

EUR 135.8 − EUR 53.81 = EUR 81.99 additional cost per tonne

EUR 81.99 × 220,000 tonnes = EUR 18.04 million per year

 

Following the fire at our facility, Energesman has been subjected to dozens of inspections by the Environmental Protection Department and the Fire and Rescue Department. Violations were recorded for even minor issues – for example, for a container temporarily placed outside the fence.

At the same time, institutions failed to identify that competitor Ecoservice was allegedly using 0.7 hectares of state-owned land without legal grounds and storing waste there, while they have also raised no objections regarding Ekonovus, which is processing waste directly on bare ground near the banks of the Vilnelė River.

State-owned land used as private property

“It is difficult not to be astonished by such double standards. A legitimate question arises: whose interests are these institutions serving? In our view, they have played a significant role in what appears to be an unfair competition scheme,” says Algirdas Blazgys, CEO of Energesman.

On Friday, 24 July, it was announced that following an appeal by the Lithuanian Green Party to the State Territorial Planning and Construction Inspectorate, violations had been identified at the Ecoservice waste management facility located at Gariūnų g. 71, Vilnius.

According to the publicly available information, approximately 0.7 hectares of state-owned land had been incorporated into the Ecoservice operating area. The land contains fences, gates, vehicle weighing equipment, waste storage areas, modular containers, stored waste and other infrastructure related to the company’s operations. These elements are visible on the REGIA public mapping system.

“We have not heard that the Environmental Protection Department recorded or publicly announced a violation by Ecoservice for storing waste outside its officially designated facility boundaries. Yet Energesman was cited for temporarily placing several containers with sorted metal waste outside the fence after the fire, while we were making space for equipment needed to dismantle damaged building structures,” Blazgys notes.

The Environmental Protection Department also recorded a violation against Energesman because several plastic bags had been blown by the wind outside the fence after the fire and had not yet been collected by employees.

“Meanwhile, a competitor appears to be allowed to keep waste outside its official territory on a permanent basis without attracting any objections from the authorities. How can that be possible?” Blazgys asks.

Waste processed near the Vilnelė river while institutions remain silent

The Environmental Protection Department has stated that part of Energesman’s waste is stored on a surface that is not impermeable to water, creating a potential risk that leachate and contaminated runoff could enter the soil.

On 17 July, the Department issued a public statement to that effect even though the inspection procedure had not yet been completed and the alleged violation had not been officially confirmed. Nevertheless, this preliminary assessment was subsequently relied upon by VAATC and the Vilnius City Municipality when taking over Energesman’s operations.

Energesman emphasises that the entire Vilnius MBA site is equipped with a contaminated water collection system designed to prevent water from entering the ground.

At the same time, the Environmental Protection Department has not publicly identified any violations concerning Ekonovus, where piles of unsorted waste are reportedly stored directly on bare ground.

Images circulated on Facebook last week showing waste allegedly being processed on open ground without a hard surface at a site operated by Ekonovus in Naujoji Vilnia, Pramonės g. 141, Vilnius. The Vilnelė River flows only a short distance from the site.

Residents’ video footage here.

“Rain falls directly onto the waste, runoff may reach the Vilnelė River and seep into the ground, yet we hear no public response from the responsible institutions,” Blazgys says. “Residents tagged the Vilnius City Municipality, the Mayor and state institutions in the published footage, so it is difficult to believe that the situation went unnoticed.”

Unscheduled inspection conducted days before the takeover

Under the rules approved by the Fire and Rescue Department, waste must be stored at least 15 metres away from buildings.

“If we expanded our site onto state-owned land as our competitors appear to have done, we could easily comply with that requirement. Instead, we acted lawfully and already in 2024 asked VAATC and the Vilnius City Municipality to form an additional land plot for the Vilnius MBA facility because the existing site is too small to meet the firefighters’ requirements. No additional plot has been allocated to this day,” Blazgys says.

On 8 July, officers of the Vilnius Fire and Rescue Board carried out an unscheduled inspection at the Energesman site and recorded a violation for storing waste less than 15 metres from buildings.

VAATC and the Vilnius City Municipality later relied on this finding when announcing the termination of the operating agreement on 10 July and when subsequently filing a court claim.

“The timing is striking. Why was there a sudden need for another inspection on 8 July? If the same standards had been applied to competitors, violations related to the use of state-owned land and waste storage outside authorised plots should also have been identified,” Blazgys says.

As blogger Skirmantas Malinauskas stated publicly on Sunday, the current developments may be linked to a broader redistribution of the waste management market. In his view, competitors now have a strong commercial incentive to take over the facility because the preparatory work for rebuilding and modernising a new waste sorting plant has already been completed.

We confirm that an offer was made to the company’s shareholder to sell its shares. The interest in acquiring the shares was conveyed by one of the executives of the competing company Ecoservice. After the offer was rejected, we were informed within a few days that all contracts would be terminated.

Financial pressure

“A consistent and deliberate sequence of actions is becoming apparent. After a new head of VAATC was appointed, all payments under our valid contracts were suspended, we were prevented from using factoring services and from borrowing funds. When we encountered a shortage of working capital, we received an offer to sell our shares. We rejected it, and shortly afterwards it was announced that all contracts with us were being terminated,” says Algirdas Blazgys, CEO of Energesman.

The offer to acquire the shares was received on 8 July and was communicated through a third party via a messaging application.

We invite you to watch the latest episode by blogger Skirmantas Malinauskas, in which he cites his own sources indicating that there are indeed parties interested in taking over our company’s operations. Our topic begins at minute 43, but we also encourage you to watch the first part of the episode, as it provides a revealing perspective on how state institutions can become instruments in the hands of influential individuals.

 

Contracts terminated after the offer was rejected

On Friday evening, VAATC, accompanied by a group of security personnel, forcibly entered the Vilnius Mixed Municipal Waste Sorting Facility, ordered employees of the facility’s operator, UAB Energesman, to leave their workplaces, and took control of the site. The Mayor of Vilnius, Valdas Benkunskas, was also present at the facility.

VAATC relied on a ruling issued by the Vilnius District Court on Friday. However, the court did not grant VAATC the right to take over the operation of the facility. The ruling merely granted VAATC the right to dispose of the MBA facility buildings and equipment and allowed its representatives to enter the premises. It did not authorise VAATC to assume operational control of the plant.

The court’s ruling has created a legal contradiction because the right of “disposal” is clearly defined under Lithuanian law. It allows the owner to sell, donate, pledge or otherwise dispose of property. However, it does not confer the right to possess, manage or use that property.

Moreover, VAATC did not ask the court to grant it the right to operate or manage the waste treatment facility, and therefore the ruling did not provide such authority.

“We witnessed what many people refer to as the real waste mafia. I was not allowed to enter the facility, nor was I permitted to collect my personal belongings. We were also prevented from making an inventory of our company’s assets located on the premises, even though a substantial amount of equipment belonging to Energesman remains there,” said Algirdas Blazgys, CEO of Energesman.

The facility still contains Energesman’s shredders, magnets, bioconversion equipment, construction materials, computers and other assets worth several million euros.

While the CEO of Energesman and the company’s legal counsel were going to the facility, the Mayor of Vilnius, Valdas Benkunskas, was inside the premises.

“This bears all the hallmarks of unlawful self-help. VAATC has arbitrarily taken control of the facility despite having no legal right to do so at this stage. The court granted only the right to dispose of the property and to enter the site. It did not authorise VAATC to remove Energesman employees or prevent them from accessing the premises where both their personal belongings and company property remain,” said Dr Paulius Miliauskas, Partner at the law firm Miliauskas ir Lauraitytė.

Under the wording of the court’s ruling, the facility operating agreement between VAATC and Energesman remains in force.

Energesman will continue to defend its rights through all available legal means. The company will also appeal Friday’s ruling of the Vilnius District Court. Under Lithuanian law, the appeal must be filed within seven days.

Operator of the Vilnius Mixed Municipal Waste Sorting Facility, UAB Energesman, will comply with the ruling of the Vilnius District Court. The company will allow VAATC to exercise its right to dispose of the MBA facility buildings and equipment and will continue to grant VAATC representatives access to the site, as it has always done. At the same time, Energesman will continue to fulfil its obligations under the facility operating agreement and carry on processing waste.

In its application to the court, VAATC requested an order prohibiting Energesman from “obstructing” VAATC representatives from entering the waste sorting facility and from “disposing of” the buildings and equipment owned by VAATC.

Under Lithuanian property law, the right of disposal is one of the three core ownership rights and allows an owner to sell, donate, pledge or otherwise dispose of property. The other two rights are the right to possess (manage) and the right to use the property.

“We have never prevented, are not preventing, and will never prevent VAATC representatives from entering the site or exercising their right to dispose of their property. However, VAATC did not ask the court to grant it the right to possess, manage or use the buildings and equipment, and the court did not grant such rights. Therefore, we remain obliged to fulfil our obligations under the operating agreement and continue processing waste – and that is exactly what we will do,” said Algirdas Blazgys, CEO of Energesman.

In the reasoning of its ruling, the court itself acknowledged that VAATC’s chosen wording – requesting an order prohibiting the disposal of the buildings and mobile equipment – “is not entirely accurate from the perspective of property law.”

“The court’s ruling has only added further confusion to an already complicated situation. As before, VAATC remains entitled to dispose of the buildings and equipment it owns and to access the site, while Energesman continues to have the right to possess and use those assets. Under this ruling, VAATC has not been granted the right to take over the operation of the facility,” said Dr Paulius Miliauskas, Partner at the law firm Miliauskas ir Lauraitytė.

Energesman continues to have both the right and the obligation to receive and process waste at the Vilnius Mixed Municipal Waste Sorting Facility, as the facility operating agreement remains in force.

The waste crisis in Vilnius has not ended – it has only begun and could continue for another two, three or even five years. This is how long legal disputes in court may take and how long it may take until the waste sorting plant is rebuilt. Vilnius risks becoming dependent on several waste management companies that would both collect and sort waste, further reducing competition in the waste management sector.

The crisis will continue until a new plant is operational

As disputes over both the operation of the plant and the termination of modernisation agreements will be resolved in court, VAATC will face difficulties launching a new public procurement process for the plant’s reconstruction until these disputes are concluded. Questions may also arise regarding the legality of a new procurement process for selecting a plant operator.

“Court proceedings at all instances can take up to five years. If the case is lost, compensation for damages and lost income for the entire period would have to be paid – we are talking about tens of millions of euros,” says attorney Dr Paulius Miliauskas, partner at the law firm “Miliauskas ir Lauraitytė”.

The reconstruction of the plant building would also become VAATC’s responsibility – the organisation would have to arrange and finance the completion of these works itself. This would require launching another public procurement process, which would take additional time.

“For the entire period – which could mean several years – waste would mainly be managed using mobile equipment. This would mean less recovery of recyclable materials and higher volumes of waste sent for incineration and to landfill. Therefore, the waste crisis would continue throughout this period,” says Algirdas Blazgys, CEO of Energesman.

It is also important to note that VAATC has no practical experience in operating such a plant.

“VAATC has historically been an organisation focused mainly on administrative processes. Operating a waste sorting plant is not as simple as it may appear at first glance. Mixed waste is contaminated, which means equipment frequently breaks down. VAATC itself operates the Kazokiškės landfill – we can all see how challenging this has been, with repeated violations being recorded and residents suffering the consequences,” emphasises A. Blazgys.

Competition will decline

If waste management is transferred to Ekonovus, Ecoservice and Ekobazė, Vilnius will become fully dependent on these several companies. Together with Energesman, these were the four largest waste management companies operating in the Vilnius region.

Until now, these companies collected waste from residents and transported it to sorting facilities, as well as sorted separately collected plastic, paper, glass and metal waste.

“Market concentration will increase further, while competition will decline – Vilnius will have no alternative options if disputes arise with these companies. When competition disappears, companies can increase prices without restrictions and dictate their own conditions, because there is simply no alternative,” emphasises P. Miliauskas.

EU funding will be lost

If VAATC takes over the operation of the waste sorting plant, Vilnius will not be able to use European Union funding, as EU financing can only be allocated to waste management facilities that have legally selected private operators.

Without a private operator, EU funding would also not be available for modernising Zone A of the plant (food and kitchen waste treatment), which will cost EUR 3.6 million and which VAATC had committed to modernising directly.

In addition, EUR 7.5 million in EU funding already allocated to Energesman for textile and plastic recycling could be lost.

Preliminary estimates show that the disruption caused by VAATC could cost residents of the Vilnius region more than EUR 50 million due to increased waste management and incineration costs, plant reconstruction expenses and reduced competition. If legal disputes continue for a long time, the amount could increase even further.

VAATC’s refusal to pay EUR 1.23 million in invoices for services provided by UAB Energesman in May and June is unlawful and constitutes a breach of contract. The waste received at the plant during those months was properly sorted, baled and is awaiting incineration. Under the plant operation agreement, VAATC is obliged to pay Energesman based on the amount of waste delivered to the facility during the respective month, not on the amount of waste that has already been incinerated.

Waste was properly processed

The unsorted waste currently located on the plant’s premises was delivered during July. This is confirmed by Lithuania’s national waste accounting system (GPAIS), which records all waste movements and their exact quantities.

According to GPAIS, 6,697 tonnes of mixed municipal waste were delivered to the Vilnius Mixed Municipal Waste Sorting Plant between 1 and 15 July. In addition, during June and July the plant received another 1,797 tonnes of biodegradable waste from Ekonovus and Ecoservice under an order issued by the Emergency Operations Centre (ESOC).

“VAATC justifies its refusal to pay by referring to the amount of waste recorded at the plant in July. These are different reporting periods, so the situation in July does not prove that services were not provided in May and June. All waste delivered in May and June was properly sorted, baled and stored until it can be incinerated. This is fully permitted under the contract and has been the standard practice every summer,” says Algirdas Blazgys, CEO of Energesman.

Contrary to the contract and the law

There are currently around 19,000 tonnes of waste on the plant’s premises. More than 10,000 tonnes have already been sorted, processed and prepared for incineration. The Vilnius combined heat and power (CHP) plant currently accepts 200 tonnes of waste per day from Energesman for energy recovery. The company requested that this daily quota be increased. However, on 17 July the Emergency Operations Centre decided instead to reduce the amount allocated to Energesman even further.

“The contract does not state that VAATC only has to pay us once the waste has been incinerated. It clearly requires payment based on the weight of the waste delivered to the plant during the relevant month. The acceptance certificates for May and June have been agreed and approved by VAATC, the waste has been sorted and baled, and therefore the refusal to pay is a clear breach of contract. This is yet another obvious indication that VAATC is deliberately trying to force us out by withholding payments, exactly as we have been saying from the very beginning,” stresses A. Blazgys.

At present, VAATC has failed to pay Energesman EUR 0.23 million (including VAT) for services provided in May and more than EUR 1 million (including VAT) for services provided in June. Under Lithuania’s Law on the Prevention of Late Payments in Commercial Transactions, VAATC is required to settle these invoices within 30 calendar days.

Other companies are paid – Energesman is not

VAATC has also failed to pay Energesman for biodegradable waste delivered to the plant and subsequently processed by the company.

Biodegradable waste is placed into sealed composting tunnels, where warm air is continuously circulated for several weeks. This process dries and stabilises the material, after which Energesman must arrange transportation to the Kazokiškės landfill.

“This process consumes significant amounts of electricity, requires transport services, our employees operate the process, and we must maintain the equipment. Yet we have not received a single euro for this work, even though 1,000 tonnes of waste were delivered back in June,” says A. Blazgys.

Energesman has contacted VAATC on three separate occasions seeking to agree on a payment procedure for these services, but has received no response.

“Double standards are being applied. VAATC pays Ekonovus and Ecoservice for waste treatment, while we perform part of that treatment process but are denied payment. It is important to understand that the ESOC order obliges us to accept and process the waste, but it does not require us to do so free of charge. Likewise, the same ESOC order obliges the combined heat and power plant to accept and incinerate waste, yet that service is paid for,” notes A. Blazgys.

Intention to transfer operations to another company

The company has repeatedly requested compensation for the additional costs incurred from the Vilnius City Municipality, but all requests have been rejected.

“We have no reason to believe the outcome will be different this time, especially given the overall situation and the apparent determination to take over the modernisation and operation of the plant by any means possible and transfer these contracts to another company,” says A. Blazgys.

Under the waste sorting plant operation agreement, VAATC is obliged to pay Energesman EUR 53.81 (excluding VAT) for every tonne of mixed municipal waste delivered to the facility.

This fee covers waste acceptance, weighing, unloading, sorting, shredding, screening, separation of metals, glass, plastics and other recyclable materials, labour costs, machinery, electricity and fuel, as well as loading, transportation and final incineration.

The Vilnius Regional Court has confirmed that the operating agreement between UAB Energesman and UAB VAATC remains in force. As a result, the court found that there was no need to impose interim protective measures. Energesman is currently preparing a lawsuit challenging VAATC’s unlawful attempt to terminate the operating agreement.

“As we have consistently stated, VAATC failed to comply with the contractual provisions when attempting to terminate the agreement without prior notice. Its attempt to take over the plant was also unlawful – VAATC acted like a bulldozer, disregarding both the contract and the law,” says Algirdas Blazgys, CEO of Energesman.

The company is preparing legal proceedings challenging the grounds for termination cited by VAATC, which it considers unfounded. Under the operating agreement, unilateral termination is only permitted in the event of a material breach of contract and only after providing 20 working days’ prior notice.

“We maintain that the reasons cited by VAATC do not constitute material breaches of the agreement, and we will prove this in court. It is clear that the people of Vilnius will ultimately bear the cost of public institutions engaging in litigation and, we expect, of compensating the damage caused,” says A. Blazgys.

Energesman is also preparing separate legal action challenging the termination of the plant modernisation agreement. The agreement was signed after Energesman won the international public procurement procedure launched by VAATC.

Under the agreement, VAATC was required to make the first payment by 26 June. However, the payment was never made, despite this being a contractual obligation. Instead, on 10 July, VAATC announced that it was terminating the agreement unilaterally.

“We are fully convinced that the modernisation agreement was terminated unlawfully, although this will ultimately be determined by the court. Once again, it will be the residents who will end up paying the price,” says A. Blazgys.