Transfer of Vilnius City heating infrastructure

20.05.2019 Transfer of Vilnius City heating infrastructure

In 2002, AB Vilniaus Šilumos Tinklai leased the heat and electricity production infrastructure of Vilnius City to UAB Vilniaus Energija for a period of 15 years. The leased infrastructure consisted of several power plants and all supporting infrastructure.


The firm was the sole legal adviser to AB Vilniaus Šilumos Tinklai (VST) in preparation for the transfer of infrastructure back to the lessor. The preparation for the transfer of facilities included matters relating to (1) transfer of property and infrastructure, (2) regulatory matters such as licences and permits, (3) transfer of employees from UAB Vilniaus energija to VST, (4) financial planning, (5) development of the VST’s internal structure for subsequent operations, (6) claim procedures for breaches of the Lease Agreement by UAB Vilniaus Energija.

In addition, the firm advised and represented VST in building and defending its position in all communications and negotiations with UAB Vilniaus Energija. This included the structuring of the final transaction, drafting of transaction documents and assistance during the negotiations. The physical transfer of the facilities occurred at the end of March 2017, but a number of related issues are still being resolved, e.g. TGS Baltic represents VST and the Vilnius City Municipality in arbitration proceedings before the Arbitration Institute of the Stockholm Chamber of Commerce (SCC).

In February 2018 VST and the Vilnius City Municipality filed the Statement of Defence and the Counterclaim and are currently claiming EUR 350 million in damages from Veolia Environnement S.A. and UAB Vilniaus Energija related to the malicious performance of the Vilnius heat sector lease agreement.

The fluent transfer of infrastructure was of key importance to the Vilnius city utilities sector. The infrastructure in question provides hot water and heat energy for the entire city of Vilnius (around 96% of all heat users), therefore the transfer of infrastructure could not interfere with or suspend operations under any circumstances. This required significant coordination between all the parties involved, as well as state institutions and external experts.