The no-confidence procedure against Energy Minister Dainius Kreivys failed in the Seimas on 27 September. The process was initiated after Russia started the war in Ukraine, which has led to a surge in energy prices, including in Lithuania. Since Kreivys survived this procedure, it means that he will have six months of peace because the Seimas Statute does not allow for an interpellation of the same Minister during one session – the next session will not be held until March, Eglė Samoškaitė writing at tv3.lt news portal.
The Seimas resolution in favour of Kreivys, which approves the Minister‘s answers to the questions, was supported by 71 MPs, with 54 voting against and five abstentions.
Although Lithuania cannot influence global natural gas prices or the wholesale price of electricity, the Seimas opposition charges that the Ministry of Energy could have prepared for the price shock and that the price shock in Lithuania coincided with the liberalisation process in the retail market.
Moreover, Lithuania’s liberalisation of the retail market was chaotic. For example, Perlas Energija, an independent supplier that offered relatively low prices to household consumers, announced that it would cease its activities as electricity prices on the wholesale market exceeded expectations and consumers were allowed to lock in low prices. This would have resulted in a loss for the company.
The opposition considers that the public authorities should have regulated the process properly to ensure that such market exits did not occur. However, Mr Kreivys believes that the process was managed and that the former government drew up the design of liberalisation itself. This is true, but all parliamentary parties voted for it in the last parliamentary term without exception.
Lithuania has one of the highest electricity prices in the European Union. For example, according to euenergy.live, on 27 September, the price of electricity in Lithuania was €317/MWh, in Estonia €142/MWh, in Poland €181/MWh, in Italy €462/MWh and in Spain €100/MWh.
However, Lithuania’s problem is the lack of electricity generation and limited interconnection capacity to Sweden, Latvia and Poland. The summer heat, which limited interconnection capacity, and repairs added to the problem. Energy Minister Kreivys also did not shy away from criticising former governments who, after the closure of the second unit of the Ignalina nuclear power plant, allegedly did not do enough to increase Lithuania’s capacity to generate electricity from renewable energy sources.
“The biggest contributor to the rise in electricity prices has been the tenfold increase in the price of natural gas, which is a direct consequence of Russia’s energy war against Europe. Secondly, we saw a record dry and hot period at the end of the summer. As a result, there was no wind in the whole of the North and Central European region, there was a severe shortage of wind power, and we also had a severe shortage of hydroelectric generation in the region when the rivers ran dry. Thirdly, CO2 emissions taxes have risen significantly from EUR 68 per tonne in August 2021 to EUR 98 per tonne in August 2022. Fourthly, extremely hot weather and planned maintenance works have limited the capacity of electricity connections across the region. Interconnections between Latvia-Estonia and Lithuania-Sweden were restricted. Fifthly, the situation in the electricity markets of the major European Union countries. France and Germany, formerly the largest producers and consumers of electricity, have been transformed into electricity importing countries. Sixth, and most importantly, we have practically no electricity production in the country for a good decade,” the Minister explained.
According to Mr Kreivys, Lithuania produces about one-third of the electricity it consumes, and gas-fired generation is uncompetitive in Lithuania due to high gas prices, so we basically get the missing electricity through interconnectors. But it turns out that cheaper electricity from Sweden often flows to Germany.
The high price of electricity on the exchanges is also due to a specific algorithm where the price is determined by the marginal producer, in this case, electricity from natural gas. This principle has been repeatedly criticised by the economist Raimondas Kuodis because it gives cheap electricity producers unjustifiable profits. However, Kreivys says that this is where Europe is heading for significant changes.
The Minister also used slides to try to explain how much he had achieved in his two years in office and compared it with previous governments, which he accused of inaction. Kreivys also outlined his plans for the future: according to him, by 2025, we will be producing around 50% of the electricity we need, and by 2030, Lithuania will become an electricity exporting country. Furthermore, at the end of this government’s term, he promised that the installed capacity of renewable energy should reach 3.6 GW.
“After darkness comes light. The war will end one day. The Kremlin regime will fall, Ukraine will stand on its feet, and this Russian energy war against Europe will be over”, Kreivys concluded.
However, when the question and answer period started, Arvydas Nekrošius, a representative of the Peasant Greens, asked what the plan for how Lithuania will fight the energy war is. “So far, we have not heard any real plan from the ministry, but how will we fight the war, how will we interact with our neighbours, how will we implement our independence in the energy field?” – Nekrošius asked.
“Are you joking? Are you joking? Have you not listened to what I said and watched the slides that I presented? After all, one of the most important documents in the history of energy has been adopted,” the Minister even got nervous.
At the same time, Domas Petrulis of the Democratic Union “In the Name of Lithuania” made fun of Minister Kreivys for his tendency to blame the former governments on social media. The MP recalled a popular political joke about what a minister or a company manager should do when the going gets tough.
“When a minister comes to his office, he finds three letters. A note says that you should read the first letter when things get very difficult. When times get tough, the Minister decides to read the first letter. It says that in spite of the situation, everything is to be blamed on the former governments. The first letter should help for a while, and when it no longer helps, the second letter should be plundered. After a while, seeing that the situation is not improving, the Minister decides to open the second letter. It tells them to promise that everything will be all right and that the plan to change the situation is already here. It should help for a while when it no longer helps to tear up the third letter. After a while, the Minister sees that the promises are no longer helping, so he decides to tear up letter 3. “Minister, it’s time to write three letters to the next minister”, Petrulis joked.
The Seimas Statute regulates the procedure for interpellation in the Seimas. After Kreivys has answered the questions of the Seimas members, an editorial commission will be formed to draft a resolution of the Seimas as to whether the Minister’s answers are satisfactory. Since the majority of the drafting commission is usually made up of the ruling party, it usually decides that the answers are satisfactory and proposes that the Seimas vote in an open ballot approve the commission’s proposal. This is also the case here. The editorial board immediately met and approved Kreivys’ answers after the Minister had finished answering the questions.
Since the editorial board’s proposal is voted on openly, those in power usually do not dare to vote against their Minister, even if they have similar ideas. As a result, interpellation procedures against a minister often end in nothing, and ministers continue to work. The only surprise is if the ruling majority is dissatisfied with the Minister’s performance, but in this case, no such intention has been expressed.