Lithuanian president criticizes government for trying to rescue state-owned shipping company

Dalia Grybauskaitė
DELFI / Tomas Vinickas

“The solutions that were proposed today, calling for a better performing state company to cover and guarantee the situation of a worse-performing company, are short-term solutions. Therefore, the issue of maintaining the cargo fleet needs more serious consideration,” she told reporters in Klaipėda.

The president said that Transport Minister Rimantas Sinkevičius and Prime Minister Algirdas Butkevičius, who had held the post of transport minister for several years before 2008, should take responsibility for the failure to keep the situation under control.

According to Grybauskaitė, with many of the Transport Ministry-controlled companies operating at a loss, the authorities should think about privatizing these operations.

“If the state and the ministry can’t run this business successfully and supervise state companies, then perhaps we should think that it is not the state that should run this business. It is not a natural monopoly and (it could) be given to those who can run such a business,” she said.

A Finasta broker says that the government’s decision not to initiate bankruptcy proceedings and lend the debt-ridden company another 3 million euros will not solve its problems.

Market expectations regarding LJL have changed as investors appear to think that the company will be rescued, Domas Klimavičius said.

“But I don’t think this is going to happen, because that money basically changes nothing,” he said.

In the broker’s opinion, LJL could be saved by providing more funding or merging it with a group whose other companies operate at a profit.

LJL shares fell to the lowest possible price level of 0.001 euros per share as trading in the stock resumed on the NASDAQ OMX Vilnius Stock Exchange on Friday morning, but bounced back to 0.010 euros in the afternoon.

The government on Friday decided to try to rescue the dry bulk operator by lending it another 3 million euros and creating a transport holding company in the future.

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