Republic of Lithuania

LAW ON ENERGY

Chapter I

GENERAL PROVISIONS

Article 1. Terms and Definitions

As used in this Law: energy means a section of economy which embraces prospecting for,  extraction, transportation and storage of energy resources, generation, transformation, distribution, transmission, trade  in and consumption of different types of energy; energy system means the entire complex of energy enterprises (companies)   connected  by  technical,  organisational   or(and) economic links and functions of the mode of operation; energy  sector means the energy section connected with  any type of energy resources or energy: fuel, electricity, heat;  

primary energy resources means natural resources which  may be directly used for fuel (shale, coal, peat, biomas, combustible gas)  or  for the generation of energy (nuclear fuel,  petroleum, hydroenergy, solar energy, wind energy or geothermal energy);

renewable energy resources means natural renewable resources or  natural  resources which can be renewed, such as hydroenergy, wood, biomas which may be used for energy purposes;

secondary  energy resources means waste energy obtained  in the course of any technological process through transformation of primary  or  any  other  energy which is  not  utilised  in  this technological process;

energy efficiency means generation and consumption  of  all types of energy and its consumption in the most advanced manner;  

energy  enterprise  means an economically  and  juridically legalised  independent economic entity whose principal purpose(s) is(are) energy activities;

energy  activities means activities related to  prospecting for,   extraction,   transportation,   distribution   of   energy resources, generation, transmission of energy, trade in energy or operation of power-generating equipment;

standards  and  norms of energy means  static  and  dynamic technical characteristics of facilities, products, structures and equipment  used in energy activities which have been approved  in the  established manner, as well as specifications regulating the quality of energy and energy raw materials.

Article 2. Purpose of the Law on Energy

The  Law on Energy defines the general provisions of energy activities,   the   basic  principles  of   energy   development, 

functioning and management. Activities of individual  sectors  of energy,  of  state,  municipal  and private  energy  enterprises, 

energy  producers,  suppliers  and  consumers,  their  legal  and economic  relations when the object thereof is energy  or  energy resources,  shall  be  regulated by other  laws  and  subordinate legislation.

Article 3. Goals of Energy Policy

The  principal  goals  of the State energy  policy  are  as follows:

1) saving of energy;

2) efficient consumption of primary energy resources;

3)  reduction  of  comparative energy consumption  for  the

production of the national product;

4)  targeted efforts towards and guaranteeing  of  reliable supply  of energy resources by using various resources, including indigenous  resources, by diversification of fuel import  sources taking  into  account  the  necessity  of  demonopolisation   and decentralisation;

5)  promotion of efficient use of indigenous, renewable and secondary energy resources by the producers and consumers;

6) reliable, good-quality and cost-effective production and supply of electricity, heat and fuel from energy sectors;

7)   reduction  of  adverse  effects  of  energy  on   the environment;

8) formation of legal and economic conditions favourable for investments;

9)   promotion   of   competition  and   private   capital participation in order to increase economic efficiency.

Chapter II

USE OF ENERGY RESOURCES

Article 4. Basic Provisions of the Use of Energy Resources

The  procedure for the use of energy resources  and  energy consumption  shall be approved by the Government of the  Republic of Lithuania.

Relations  between the recipients of energy  resources  and energy  producers,  consumers and suppliers  shall  be  based  on contracts. Extraction  of  energy resources and energy production  and consumption shall be subjected to State supervision.

Article   5. Procedure  for  Approving   Subordinate Legislation Regulating Energy Activities

Subordinate legislation regulating energy activities  shall be  approved  by the Government of the Republic of  Lithuania  or other  institutions in accordance with the procedure  established by the Government.

In   addition  to  this  Law,  enterprises,  institutions, organisations  and  residents (energy  producers,  suppliers  and consumers)   must   also   comply  with   other   standard   acts (installation, operation, labour safety, personnel  training  and performance   evaluation  regulations,   etc.)   which   regulate technical,  operational and other energy -related  issues.  These standard  acts  shall be approved by the Ministry  of  Energy  or other   state  institutions  of  Lithuania  according  to   their respective competence.

Article 6. Energy Saving Fund

Energy  Saving Fund is set up for the purpose of  efficient implementation  of  measures for the supply of energy  resources, energy production and consumption.

The  capital of the Fund shall be used for financing energy saving   and   efficient   consumption   programmes,   for    the introduction, operation and development of measures for  the  use of indigenous, renewable and secondary energy resources. The Government of the Republic of Lithuania shall determine the  initial contribution to the Fund and approve the regulations of the Fund.

Article 7. Energy and Environmental Protection

Energy   activities  shall  be  regulated   by   laws   on environmental protection, subordinate legislation, other standard documents,  taking  into account the requirements  set  forth  in international agreements (conventions) on environmental issues.

It shall be prohibited to initiate energy activities if the activities   are  not  in  compliance  with  the   Law   on   the Environmental  Protection, standards and norms  of  environmental protection.

Article 8. Rights and Duties of Energy Consumers

Energy  consumers shall use energy in compliance  with  the standard documents approved by the Government of the Republic  of Lithuania.

The rights of energy consumers shall be protected by the Law on  Consumer  Protection and other legal acts of the Republic  of Lithuania.

Chapter III

ENERGY STRATEGY AND INVESTMENTS

Article 9. Shaping of the National Energy Strategy

The  aim  of the National Energy Strategy is to define  the purposes of energy development, the most important principles  of its  management, taking into account the development  of  economy under market conditions.

The  National  Energy Strategy shall  cover  the  following sectors:

1) electric energy sector;

2) thermal energy sector;

3) gas sector;

4) petroleum and its products sector;

5) other fuels sector.

The National Energy Strategy shall be worked out for no less than 20-year period and shall be revised at least every 5 years. Development of the National Energy Strategy may be financed with the State funds. The Ministry of Energy shall be responsible for the development of the Strategy.

The National Energy Strategy shall be approved by the Seimas on the proposal of the Government of the Republic of Lithuania.

Long-term energy development projects shall be worked out in compliance with the National Energy Strategy. Long-term  energy  development projects  must  be  prepared taking   into   account  the  possibility  of  implementing   the demonopolisation principle and using decentralised energy sources and  small-scale energy. The procedure of project development and approval shall be established by the Ministry of Energy.

Article 10. Investments

Energy facilities of national significance shall be built in accordance  with  the  National  Energy  Strategy.  They  may  be financed from various sources on a competitive basis. The  amount of State capital must guarantee that controlling interest is held by the State.

Financing of municipal and other energy facilities of local significance,  as well as development of energy activities  shall be   the   concern  of  city  (district)  municipalities,  energy suppliers or(and) consumers, private investors.

Article 11. Fuel Reserves

In  order  to  increase reliability of energy supply,  fuel reserves shall be accumulated at energy enterprises. The reserves must  be  no less than the amount of fuel required to satisfy  2- month energy demand.

The  procedure  for  the  building  up,  storage,  use  and accounting  of  State fuel reserves shall be  determined  by  the Government of the Republic of Lithuania. The Ministry  of  Energy shall  be  responsible for the building up and use of State  fuel reserves.

The  Government of the Republic of Lithuania shall allocate funds for the building up and storage of State fuel reserves. Energy producers must have reserve or emergency fuel, taking into account the significance of the facility.

Article 12. Use of Renewable and Secondary Energy Resources By shaping taxation policy, granting soft credits, extending grants, the State (municipality) shall promote efficient  use  of renewable and secondary energy resources.

The Ministry of Energy shall be responsible for the use  of renewable and secondary energy resources. At  the  request  of  consumers who  use  renewable  energy resources, surplus energy generated by their autonomous equipment must  be  received  into the energy networks  and  settlement  of accounts  with such consumers shall be effected on  a  negotiated price and tariff basis. The procedure and terms and conditions of their  connection to the energy networks shall be established  by the Ministry of Energy.

Credits shall be extended in order to implement measures for ensuring  efficient  use of indigenous, renewable  and  secondary energy resources. The procedure of credit extension and repayment shall  be  established  by  the Government  of  the  Republic  of Lithuania.

The  use of potential energy of internal waters, when  this entails  damming of the river or changing the river bed,  and  of geothermal  energy  shall be permitted only  upon  receipt  of  a licence  issued  in accordance with the procedure established  by the Government of the Republic of Lithuania.

Chapter IV

PRINCIPLES OF ENERGY MANAGEMENT

Article 13. Ownership

All  primary  energy resources found in  Lithuania  in  the underground  of  the earth and in the continental  shelf  of  the Baltic  Sea  are exclusive property of the State. They shall be used under licences issued pursuant to the procedure prescribed by the Government of the Republic of Lithuania. Energy enterprises (companies) may be of any ownership form permitted  under law, except for energy enterprises  of  national significance the list whereof shall be approved by the Seimas  of the Republic of Lithuania on the proposal of the Government.

State-owned and private energy enterprises and facilities as well  as  joint  ventures and energy enterprises  and  facilities owned  by  foreign states may be set up in the territory  of  the Republic  of  Lithuania.  The terms and conditions of their existence in the territory of the Republic of Lithuania shall  be regulated by the Government of the Republic of Lithuania  on  the basis of the Constitution of the Republic of Lithuania, this Law and other laws in effect in the Republic of Lithuania, as well as agreements between states.

Setting up, sale or transfer of energy enterprises as well as granting of licences for the use of energy resources to legal or natural persons of foreign states shall be prohibited if this may  be detrimental to the interests of the Republic of Lithuania or  increases  its dependence on the energy monopoly  of  foreign states.

Article 14. Allotment of Land for Use and Land Lease

For the construction and extension of energy generation and transmission facilities, construction of electric power lines and pipelines, land shall be allotted for use or leased in accordance with   the   procedure  established  by  laws   and   subordinate legislation.

Restricted  area shall be established for  the  purpose  of ensuring  security  and  normal operation of  energy  facilities, electric power lines and pipelines, and other installations.  The

land  of restricted area shall not be taken from the land  owners and other land users and its practical use shall be restricted. Regulations  for  the  protection  of  energy  facilities, electric  power  lines and pipelines shall  be  approved  by  the Government of the Republic of Lithuania.

Specific  conditions of land use restriction and amount  of compensation for possible damage incurred by reason thereof shall be  recorded in an written notarised agreement concluded  between the   owner  or  other  user  of  land  and  the  energy   system (enterprise).  Agreements between land owners and energy  systems (enterprises)  regarding the use of land shall  become  effective upon  the registration thereof in the Data Register of the  State Land   Cadastre.  Land  use  restrictions  prescribed  by   these agreements  must  be in compliance with the regulations  for  the protection  of  energy  facilities,  electric  power  lines   and pipelines.

Article  15.  Prices,  Pricing  and  Control  over  Energy Activities

Fuel  prices  and  energy  tariffs  shall  be  fixed  upon evaluating necessary expenses related to fuel extraction,  energy generation,  purchase, and transportation as well as  development of  energy. Prices and tariffs must correspond to the quality of energy,  promote efficient energy generation, its  good  quality, reliable  supply, economical consumption and reduction of  supply losses as well as the use of secondary energy resources.

Electric  and thermal energy as well as natural gas  prices and  tariffs may be differentiated according to consumer  groups, energy quality, reliability of supply, time of consumption  (day,

week, season) and the amount of energy consumed.

The issues of pricing in the energy sector shall be examined by  the standing State Commission for the Control over Prices  of Energy Resources and Energy Activities.

The Commission shall be appointed for a term of 5 years  on the  nomination  of the Government and its regulations  shall  be approved by the President of the Republic.

The  Commission shall examine the most important issues  of energy  economy, including investments, establish the  principles of  pricing  in  the energy sector and the rules  for  price  and tariff  calculation, shall check and approve the  calculation  of electric  energy,  thermal  energy and  natural  gas  prices  and tariffs,  submit the electric energy, thermal energy and  natural gas  prices  and  tariffs to the Government of  the  Republic  of Lithuania  for  approval,  supervise their  application  and  the implementation of the saving programme. The Commission shall have the  right  to  check  the  energy  quality,  its  conformity  to standards,  and  shall  exercise control  over  trade  in  energy resources  and energy products. The Commission shall  submit  its findings  and  proposals to the Seimas,  the  Government  of  the Republic  of  Lithuania and, in the event  of  disclosure  of  an offence, to the prosecutor”s office.

On  the  decision  of the Government  of  the  Republic  of Lithuania or a municipal council, compensations may be  paid  out from  the  State or municipal budgets to certain consumer  groups for the purchased fuel, electric and thermal energy.

Fuel prices and energy tariffs of facilities that are within the  sphere  of  regulation of municipalities  may  be  fixed  by municipalities. Prices and tariffs for consumers that are  within the  sphere  of municipal regulation shall become effective  only upon  co-ordination  thereof with the State  Commission  for  the Control over Prices of Energy Resources and Energy Activities and upon  the  approval thereof by the Government of the Republic  of Lithuania.

Chapter V

PRINCIPLES OF ENERGY MANAGEMENT

Article 16. Energy Management

Energy  activities shall be regulated by  the  Ministry  of Energy  and other institutions of the Republic of Lithuania.  The Ministry of Energy shall represent State interests in the  sphere of  energy,  implement  State energy  policy  goals  and  act  in compliance with the regulations approved by the Government. The  Energy Agency shall work out draft programmes  of  the National Energy Strategy and of economical and efficient  use  of energy  resources, organise their implementation,  devise  legal, economic  and  organisational measures for the implementation  of national policy of efficient energy use as well as draft laws and subordinate legislation regarding the issues. The Energy Agency is a State enterprise. Its founder is the Ministry of Energy.

Article 17. Energy Licences

A  licence  shall  be  required  for  engaging  in  energy activities. The  procedure  for  issuing  energy  licences  shall   be established by the Government of the Republic of Lithuania. 

Article  18.  Energy  Sectors and  Peculiarities  of  their Activities

The Republic of Lithuania has the following energy sectors: electric  energy,  thermal energy, gas,  and  petroleum  and  its products sectors.

Electric  power plants operating within the general  energy system shall work under unified conditions of operation and  must comply with operational control. The above-mentioned requirements shall   be   mandatory   to   repairs  and  construction-assembly enterprises  as  well as other enterprises the main  function  of which  is to maintain and ensure normal operation of the electric power system.

The energy system may be connected to foreign state electric power systems for operation in parallel mode on contractual basis and shall be under joint operational control of energy systems in accordance  with  the functions regulated by  agreements  between states.

When the pipelines are connected to foreign state networks, the  sectors  of  gas, petroleum and its products  shall  operate under joint co-ordinated control in accordance with the functions regulated under agreements between states.

Article  19.  Training of the Energy Sector  Personnel  and their Performance Evaluation

Executives and specialists of energy enterprises engaged in energy  sector production operations must have special  training. Energy  enterprises shall prepare and train the personnel at  the educational institutions supported by these enterprises.

The  personnel of energy enterprises specified  in  Par.  1 hereof  must  from  time  to  time be  subjected  to  performance evaluation.

The  personnel engaged in the operation of power-generating equipment  must have adequate qualifications and be subjected  to performance evaluation.

The  procedure for training and performance  evaluation  of energy  specialists  shall  be established  by  the  Ministry  of Energy. 

Chapter VI

STATE SUPERVISION OF ENERGY AND RESPONSIBILITY FOR VIOLATIONS OF THIS LAW

Article 20. State Supervision of Energy

State  supervision of energy shall be carried  out  by  the State  Energy Inspectorate at the Ministry of Energy (Amended  28 March 1996).

State  supervision of power-generating equipment of natural and legal persons (according to the list approved by the Ministry of  Energy)  shall  be exercised on the whole  territory  of  the country  irrespective  of  the official subordination,  forms  of ownership   and  capacity  of  power-generating  equipment.   The Inspectorate  shall not exercise state supervision  over  nuclear power equipment.

The  main  purpose of the Inspecorate is to exercise  state supervision  and  control  over  power-generating  equipment   of natural  and legal persons of the Republic of Lithuania in  order to  ensure  reliable, efficient and secure supply and consumption of energy resources.

Article  21. Responsibility for Violations of  the  Law  on Energy

Legal  and natural persons who violate the requirements  of this Law shall be held responsible under the laws of the Republic of Lithuania.

Chapter VII

INTERNATIONAL ACTIVITIES

Article 22. International Activities

International activities in the sphere of energy  shall  be developed in the interests of the Republic of Lithuania. International  activities of energy systems  (enterprises), institutions  and  organisations shall  be  co-ordinated  by  the Ministry of Energy. The  Ministry  of  Energy  shall submit  proposals  to  the Government  of the Republic of Lithuania in accordance  with  the established  procedure regarding participation  in  the  work  of

international energy organisations.

I  promulgate this Law passed by the Seimas of the Republic of Lithuania.

Algirdas Brazauskas

President of the Republic

Vilnius

28 March 1995

No. I-828

(As amended by 28 March 1996)