Vilnius street lighting system renovation

20.05.2019 Vilnius street lighting system renovation

The Vilnius city municipality signed a public-private partnership (PPP) agreement for the modernization of the city’s street lighting. The principal investment was to comprise the replacement of existing street, pedestrian crossing and tunnel light fixtures with new light emitting diodes (LED) and the implementation of a new remote control and adjustment system.

The project was to improve the quality of the street lighting in Vilnius while reducing the amount of consumed electricity. It was for the first time in Eastern Europe when the lighting system of the city with over 600,000 habitants was to be renovated at the same time.

TGS Baltic joined the project as the private partner’s adviser in 2015 as there were fundamental disagreements between the private and public partners that led to suspension of the project implementation at its very beginning, i.e. during the preparatory stage. The role of the law firm was to help the parties, by using all possible legal means, to solve the disagreements and put the project back on track.

Complexity of the situation and applicable mandatory regulation led to the fact that there were two parallel streams of legal services. First, extrajudicial cooperation with the public partner focused on the search for the best workable solutions acceptable to both the parties. Due to regulation applicable to the public partner, solutions were to be in line with the PPP agreement and comply with legal acts applicable to the Vilnius city municipality and the PPP regulation in Lithuania.

Second, the dispute between the parties was submitted to arbitration and TGS Baltic team successfully defended the clients’ interests. The Arbitral Tribunal granted an award in 2017, thus satisfying Gemmo and other claimants’ reliefs sought, stating that the Vilnius city municipality breached the Partnership Agreement, notably, the duty to cooperate specified therein. Based on this, the Tribunal renewed the Partnership Agreement. However, because of the Municipality’s prejudice towards Gemmo, further negotiations failed and now Gemmo seeks damages in another arbitration, which started in December 2017.

The Vilnius street lighting system renovation project was the first of a kind in Lithuania, attempting to essentially renovate / modernise street lighting by applying the PPP procedure. Public entities in Lithuania do not have required experience in implementing such PPP projects. Therefore, the Vilnius street lighting system renovation PPP is forming practice, which later will be adopted by other municipalities in Lithuania.