Prime Minister – real estate maintenance costs the state 180 million euro annually

Saulius Skvernelis
DELFI / Karolina Pansevič

For the first time ever it has been calculated how much real estate the country is in control of.

“It is surprising that over 27 years there have been no attempts to take inventory of this property. No less surprising is the ineffective use of this property. We have to finally resolve this issue,” says Prime Minister Saulius Skvernelis.

According to him, the Ministry of Finance will present a report and proposals on how to better manage state owned real estate in a Wednesday cabinet meeting. The necessary decisions will be made then.

The first annual report of state owned real estate for 2016 was prepared by the state enterprise Turto Bankas. According to the analysis performed, a number of ministries own more real estate than needed for their direct functions.

The country’s real estate is comprised of 28 thousand objects and a total of 10.45 million square metres. The property, valued at more than 3 billion euro, is managed by 724 state institutions and companies, the maintenance of this property costs the state 180 million euro annually.

The largest part of state real estate is made up of objects of education (almost 19%), administrative (17%) and production and warehousing (11.5%) purpose objects. Most of the property is concentrated in Vilnius, Kaunas, Klaipėda and Panevėžys.

The report has clearly displayed that a part of the administrative purpose state owned real estate (over 2000 objects at a total of 1.79 million square metres and valued at 950 thousand euro) is managed and used ineffectively.

“A part of the ministries manage more real estate than is necessary to fulfil their direct functions. Seven of the fourteen ministries have more than 28 square metres of real estate per employee, while eight ministries exceed the 36 euro per square metre maintenance norm,” PM Skvernelis stated.

The most space per staff member is dedicated at the government chancellery, over 69 square metres per staff member. After that follows the ministries of Economy (42.45 sq. m), Education and Science (37 sq. m), Foreign Affairs (36.05 sq. m), Agriculture (33.63 sq. m), Justice (32 sq. m), Culture (30.12 sq. m) and Social Security and Labour (28.34 sq. m).

The largest maintenance expenses per square metre were found at the Ministry of Internal Affairs (64.27 euro per sq. m). The 36 euro per sq. m limitation was found to also be exceeded in the ministries of Justice (56.23 euro), Education and Science (50.30 euro), Foreign Affairs (41.83 euro), Environment (38.59 euro), Agriculture (37.13 euro), Social Security and Labour (36.94 euro) and Culture (36.80 euro).

Furthermore a portion is rented out (250 thousand sq. m), handed over to the private sector on the basis of uncompensated use (238 thousand sq. m) or is vacant and unused (196.8 thousand sq. m). The public sector itself is currently renting 71.7 thousand sq. m of real estate and paid 6.2 million euro in fees for it. The rent of state owned real estate brought in 7.4 million euro last year.

The report has also revealed that both in Lithuania and abroad the managers of state owned real estate are still overseeing leisure, residential and economic purpose objects which has nothing to do with their direct functions.

“In order to effectively manage state owned real estate we must reduce maintenance costs and obtain returns. We must encourage institutions to relinquish their narrow departmental perspective, have to enact real estate centralisation more decisively and actively. We must relinquish real estate not related to state functions, while that which is necessary must be made use of at the lowest possible budget cost. This is the path we will take,” states PM Skvernelis.

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