RESTRICTED
WORLD TRADE WT/ACC/LTU/17
1October 1997
ORGANIZATION(97-4109)
Original: English Working Party onthe
Accession ofLithuania
ACCESSION OFLITHUANIA
ThePrivatization Process inLithuania
(1991- 31July1997)
Currently, private sector activity isresponsible foralmost 70percentofGDP.
Privatization inIndustrial andServices Sectors
Lithuaniamovedquicklytobeginprivatizationofindustrialandservicesectors.Lithuaniafocused
firstonprivatization ofsmall- andmedium-sized enterprises -asofmid-1997, 5,872 oftheseenterprises
hadbeenprivatized (2,944 enterprises werefullyprivatized and2,928 partially privatized), theircapital
accounting forapproximately one-quarter ofthetotalcapital ofthe8,065 enterprises thattheState
owned before privatization.
Theprivatization ofthose typeofenterprises wasoriginally through vouchers totheemployees
andmanagers oftheenterprises andcitizens ofLithuania (stage Iofprivatization), however, in1995,
privatization began totakeplace using other methods, including cash-based privatization allowing
participation offoreign investors (stage II).Tables 1and2provide information onthestatus ofthis
effort broken down bymajor industrial andservices sectors (during eachstage mentioned above) and
indicating whatlevelofprivatization hasbeenachieved ineachsector (insome cases, theGovernment
retains some shares ofthenewjoint-stock companies asatransitional measure tofullprivatization).
Building onthesuccess inprivatizing small- andmedium-sized enterprises, in1996, the
Lithuanian Government drew upplans forprivatization of13large andstrategic enterprises inkey
industry andservices sectors: energy, communications, transport andother. SeeTable 3foralisting
ofthese enterprises. Inmost cases, theState stillholds substantial (80-100 percent) shares ofthose
enterprises. Thisprivatization isbeing carried outoncashbasis andisopentoforeign anddomestic
investors alike. Inaddition totheenterprises listed inTable 3,theGovernment alsohasundertaken
programmesforprivatizationofthe3StatecommercialbanksinLithuania:LithuanianStateCommercial
Bank,LithuanianSavingsBankandLithuanianAgricultureBank.Thisprocessofprivatizationof13State
enterprises andbanks could taketime, however, onceitiscompleted much oftheremaining capital
ofState-owned enterprises willhavebeentransferred totheprivate sector.
Intheyear2000, theGovernment willreview theneedforfurther privatization. Currently,
there areonly157enterprises which arenotincluded intheprivatization plans. Among suchstrategic
entitiesareforexampleStateNuclearPowerPlant,“Lietuvospastas”(LithuanianPost),airports,railways
andtheirinfrastructure, pipe-lines, electricity transmission lines, seaports, etc.WT/ACC/LTU/17
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Table 1
Privatization Level inLithuania (1991 -31July1997)
(includes fullyandpartially privatized enterprises)
Sectors of
economyStage Iofprivatization
1991 -August 1996Stage IIofprivatization
August 1996 -31July1997Percentage of
State capital in
sector which
hasbeen
privatized
Number of
enterprisesCapital value
(mlnLTL)Number of
enterprisesCapital value
(mlnLTL)
Industry 793 1,984.2 20 13.1 87%
Transport 161 128.2 2 0.015 31%
Construction 600 339.3 14 0.61 98%
Trade 1,721 226.9 45 3.38 77%
Public utility 345 34.8 5 0.262 29%
Services 991 57.5 5 0.234 98%
Other 1,103 612.1 67 4.0 96%
Total 5,714 3,383 158 21.6 73%(average)
Table 2
Fully Privatized Enterprises (1991 -31July1997)
(those enterprises included inthecalculation forTable 1
which havebeenfullyprivatized; number ofenterprises)
Sectors ofeconomy Stage Iofprivatization
1991 -August 1996Stage IIofprivatization
August 1996 -31July1997Total
Industry 58 20 78
Transport 10 2 12
Construction 21 14 35
Trade 1,107 45 1,152
Public utility 264 5 269
Services 787 5 792
Other 539 67 606
Total 2,786 158 2,944WT/ACC/LTU/17
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Table 3
Energy, Communications, Transport andOther Large-Scale Enterprises
ToBePrivatized in1997-1998 ByWayofInternational Tender
(Government Resolution No.109of11February 1997)
Name ofenterprise, fieldofactivity Capital value
(thous LTL)State
(municipality)
heldshare in
capital value
tobe
privatized
1. Joint Stock Co.“Geonafta ”(maintenance ofpumps and
compressors, reconnaissance works ingeology)22,288.7 81.3%
2. State Enterprise “Lietuvos radijo irtelevizijos centras ”
(technical service ofcommunication services)57,317.6 100%
3. State Enterprise “Lietuvos telekomas ”(communication) 757,330.8 100%
4. Joint Stock Co.“Mazeikiu nafta”(oilprocessing) 406,000.0 90%
6. Joint Stock Co.Vessel Shipment “Klaipedos smelte ”(sea
transportation)38,028.8 89.5%
7. Joint Stock Co.“Vakaru laivu remontas ”(sea
transportation)83,253.4 92.8%
8. Special Purpose Joint Stock Co.“Lietuvos juru
laivininkyste ”(seatransportation)471,343.3 80.0%
9. Joint Stock Co.“Lietuvos avialinijos ”(passenger
transportation byair)76,538.3 100%
10. Joint Stock Co.“Aviakompanija Lietuva ”(passenger
transportation byair,cargo-carrying byair)2,766.4 100%
11. Joint Stock Co.“Viesbutis Lietuva ”(hotels, activity of
travel agencies)26,905.8 70.0%
12. Joint Stock Co.“Kauno aviacijos gamykla ”(aircraft
maintenance)17,760.7 100%
13. Joint Stock Co.“Laivite ”(ship building and
maintenance)344,590.8 32.5%
Privatization intheAgricultural Sector
Privatization oftheagricultural sector hascontinued andwasdivided intothree groups:
- privatization ofland;
- privatization ofState-owned farms; and,
- privatization offoodprocessing industry enterprises.
Privatization oflandwasdivided intothree groups: landrestoration toformer owners; landlotsfor
construction -obtaining iscarried outbywayofcompetition; landofcollective gardens.
Currently, according tostatistics of1January 1997, theState owned 62.3percentofland
(mainly forests, cities’territory, Statefarms (seebelow), landforscience needs, landwhich containsWT/ACC/LTU/17
Page4
natural resources). Privatization oftherestofthelandwillspeed upafternewlegislation enters into
force.
Forthemostpart,privatization ofState-owned (collective andsoviet) farms wasfinished in
1993, andbyJuly1997 Lithuania hadwholly privatized 99.7percentofState-owned farms. They
were transformed into: (i)agricultural partnerships (joint-stock companies) (2,500 entities);
(ii)cooperative-societies (225entities); and(iii)farmers (150thous).
TheStatehadexcluded fromtheprivatization process itsshares in:(i)19experimental farms
atresearch institutions ofagricultural science studies; (ii)54teaching farms atagricultural schools;
and(iii)8farms ofpure-strain enterprises.
Asofthesame date(July 1997), Lithuania hadmade significant progress intheprivatization
of287foodprocessing (meat, milk, grain, cropselection, etc)andagroservice (services provided at
therequestoffarmers,cooperative-societiesandagriculturalpartnerships:cultivationoflandbydifferent
machinery, fertilization, etc.)enterprises thatwereidentified forprivatization. These 287enterprises
represented theentire share ofallState-owned assets inagro-processing.
Originally upto50percentofcapital value of234enterprises were provided toindividual
agricultural producers onapreferential basis (mainly byshares subscription) withthepurpose of
combining inputproducers withagroservice suppliers andfoodprocessors. However, starting in1995,
privatization began onacashbasisandallowed theequal participation offoreign anddomestic investors.
Some ofthese enterprises havebeenfullyprivatized andsome havebeenpartially privatized asa
transitional steptofullprivatization.
Thefollowing Table 4illustrates thedegree ofprivatization ineachsector. Notincluded in
thecalculations inthistableareafewindustries inthefoodprocessing sector inwhich theLithuanian
Government, forvarious reasons, continues toholdasignificant amount ofshares. Forexample, in
order toretain influence theStatecurrently holds 85percentoftheshares intheindustry ofproduction
ofalcoholic beverages; 70percentoftheshares intheplant oilindustry; and70percentofshares
intheprimary processing ofgrains (thisisallinthejoint-stock company “Jonavos grudai ”which
acquired functions ofstorage andreplenishment ofState reserves).
Table 4
Degree ofPrivatization inEach Sector ofAgro-Processing
(byJuly1997)
(calculated according tohowmuch oftheoriginal capital ineachsector
asawhole hasbeentransferred from theState totheprivate sector)
Agroservice enterprises 89%
Seedcultivation 99%
Meat processing 82%
Dairy processing 77%
Grain processing 95%
Bakeries 80%
Breweries 80%
Confectionery production 80%
Flaxindustry 98%WT/ACC/LTU/17
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Sugar refining 44%(butexpected 90%, because byendof1997 two
sugar refineries willbeprivatized upto100%; and
privatization levelofresttwosugar refineries willmake
upto80%)
Fruit andvegetable processing 68%(butmore expected byendof1997, because two
(total-five) fruitandvegetable processing enterprises will
beprivatized upto100%)