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. Last Updated: 07/27/2016

U.S. Urges Balts to Privatize Power

VILNIUS, Lithuania -- U.S. Energy Secretary Bill Richardson, on his first visit to the Baltic states, urged the countries to privatize their power industries, saying the sector could boost ties to the West.

"Electric power can be a binding force by making the region more independent, by fostering cooperation among the three nations and by increasing infrastructure ties with your Nordic and European neighbors," Richardson said last week in a statement.

He also emphasized the need for investment in the largely underdeveloped sector, which would take power companies out of inefficient state hands, resulting in less corruption, greater environmental quality and eventually more state revenues.

"Not only does privatization free up money in current budgets, but newly-privatized companies eventually contribute to new government revenues through the payment of taxes," Richardson said.

The Baltic states face a power generation quandary in the next 10 years, as Lithuania's primary source of nuclear power - the Soviet-built Ignalina plant - is expected to be decommissioned.

Latvia can only produce about half of its needs, while some experts doubt that Estonia's oil shale-fired plants are long-term solutions.

All three power companies remain in state hands, although Lithuania plans to sell a majority stake in its transmission network in an open tender this year.

Richardson, who gave the keynote address at a two-day power sector investment conference Thursday, said foreign investment was the solution.

"Letting private investors finance needed improvements in the energy sector will ensure that energy facilities in the electric and gas industries are sufficient to meet present and future demand," he said.

Richardson also emphasized that the government would be able to maintain some control over the sensitive issue of utilities prices through regulatory agencies while allowing the companies themselves develop into efficient producers and suppliers.

He congratulated Lithuania on its decision to close one of the two Chernobyl-type reactors at Ignalina by 2004 and said the Department of Energy supported the recent investment by U.S. Williams into the key local oil concern.