Vilnius street lighting upgrade project at risk of falling through

In line with the agreement signed between the company and the local authority of Vilnius last year, Gemmo had until 28 April to find a finance provider. The City Council of Vilnius was on Wednesday asked to extend the deadline at least until the end of June, but it did not have a quorum to make the decision.

Gemmo, which is implementing the project in a consortium with Estonia’s VSLS, said in a draft agreement that it had reached tentative deals on financing with the European Energy Efficiency Fund (EEEF) managed by Deutsche Bank as well as with the SDCL fund, which provides funding for energy efficiency projects.

However, potential providers of financing asked to refine certain provisions of the agreement with the local authority of the Lithuanian capital.

“If we do not extend the term of the agreement by three months, as asked by Deutsche Bank, this will mean the collapse of the six-year project,” outgoing Mayor Artūras Zuokas said.

He admitted after unsuccessful voting that the local authority would now have to look for financing on its own.

Meanwhile, incoming Vilnius Vice-Mayor Valdas Benkunskas said that the new local authority, which would take over on Apr. 22, would still have a week to make the decision. He noted, however, that it was most likely to discuss a proposal to terminate the project and to upgrade the networks with its own resources.

“We’ve heard that the concession operator, which would take over those assets, would fully recover its investment within several years,” he said.

Other politicians said that the selection of the tender winner had not been transparent.

The deal between the local authority of Vilnius and Gemmo on the upgrade and maintenance of street lighting networks of the Lithuanian capital was signed a year ago.

In line with the deal, Gemmo and its partner, Estonia’s VSLS, were to upgrade street lighting in the Lithuanian capital in a couple of years. Some 31 million euros was to be invested in the upgrade of city networks, which were to be operated and maintained by Gemmo during eighteen years. The total value of the deal was estimated to reach some 98 million euros.

Some 44,000 street lights existing in Vilnius were last upgraded between 1997 and 2000. The wear-out rate of street lighting installations exceeds 89.5 percent. As estimated, electricity consumption could be reduced by as much as 70 percent with the networks upgraded.