VILNIUS. After efficiently adapting to changed operating environment due to the COVID-19 pandemic and utilising favourable trends in the gas sector, the state-owned energy transmission and exchange group EPSO-G, according to preliminary unaudited data for 2020, has earned EUR 273.7 million in revenue. This represents a 9.1 percent rise from EUR 251 million in the same period in 2019.
Operating earnings before interest, taxes, depreciation, and amortization (EBITDA) of EPSO-G group increased from EUR 47.6 million during this period up to EUR 78 million. The net profit of EPSO-G Group amounted to EUR 42.9 million compared with EUR 11.4 million in 2019. EPSO-G scaled down its financial liability to the “Ignitis Group” for stocks of its subsidiary “Litgrid” by EUR 8 million to EUR 148.6 million.
This is the best financial result since the launch of operations of the EPSO-G group. Energy transmission operations are regulated, therefore the earned surplus is returned to the country’s consumers. Part of the surplus is repaid by reducing the applicable electricity transmission tariff this year.
“In 2020, the benefits of targeted energy transmission infrastructure and regional integration became particularly evident, with the greatest impact on the positive dynamics of the EPSO-G results was created by the favourable prices of gas and the significant growth in gas transmission services to the direction of Latvia due to the launch of the gas pipeline linking Estonia and Finland, as well as the increase in the gas demand in the country’s energy sector. These factors offset the decline in revenue considering the warmer weather at the beginning of the year and slightly decreased volume of energy transmission services due to the slower economy development in the country. The impact on the results of the performance was created by the change in prices of regulated services and lower operating costs.
With the launch of operations in the Finish market at the beginning of last year and the increase in the number of exchange participants and transactions, the trading turnover in the GET Baltic Gas Exchange increased by more than two and a half times and accounted for 11 percent of total gas consumption in the Baltic and Finnish markets.
Consumer-friendly trends continued in the biofuels market. In 2020, the price of biofuels on the Baltpool Exchange decreased by almost a fifth. It is particularly positive that central heating companies are increasingly focusing on price risk management and taking advantage of the opportunities offered by the biofuel market. After reorganising the operating model of the contracting company “Tetas” and ending the year profitably, reducing dependence on a single customer and increasing profitability have resulted in a pro-active search for new opportunities in the market for the introduction of renewable energy sources.
At the same time, companies of EPSO-G Group have continued to implement synchronisation projects with continental European energy transmission networks and the construction of the gas pipeline with Poland. In 2020, two more of the 14 government-approved projects for synchronisation with continental European networks have been completed. The European Union has provided maximum funding for the construction of the maritime link with Poland and installation of synchronous compensators. The fact that in 2020 the most complex GIPL construction works were completed and part of the constructed section of the pipeline was tested and connected to the gas transmission system, makes us confident that the entire project will be completed by the end of the year. We are also working with regional partners to make the most of the regional potential of the GIPL interconnection.
We continue to closely monitor the situation with regard to the COVID-19 virus and we are ready to adjust our actions accordingly if necessary,” commented CEO of EPSO-G Rolandas Zukas on the group’s performance in 2020.
In 2020, 10,088 GWh of power were transferred by the high voltage transmission networks for the needs of the country’s population and businesses and it was 2 percent less compared with 2019. This was mainly due to lesser energy demand in the first quarter of the year considering warmer than usual temperatures and the slowed-down economy development due to the COVID-19 impact.
In 2020, almost 25,144 GWh of natural gas was transported via the Lithuanian gas transmission system and it was 7 percent more compared with 2019. This was mainly influenced by the increased demand for gas in the electricity generation sector.
The volume of transported gas from Kiemenai GMS gas transmission system to Lithuania was 7,960 GWh of natural gas while in 2019 it was 5,990 GWh. Compared to 2019, gas transmission to the Baltic states and Finland grew by 33 percent. During this period, to the Kaliningrad region, which is a part of the Russian Federation, 24,902 GWh of natural gas was transported while in 2019 it was 26,002 GWh.
In 2020, the volume of GET Baltic Natural Gas Exchange trade accounted for 7,201 GWh in Lithuania, Latvia, Estonia, and Finland. In comparison with 2019, the volume of trade increased more than 2.5 times. The greatest impact on the increased volume of trade was made by successful launch of operation in Finish market.
In 2020, heat supply companies, independent heat producers and industrial companies operating on Baltpool Energy Resources Exchange traded 470 thousand tons of biomass, or almost 9 percent more compared to 2019.
Revenue and costs
In comparison to 2019, the revenue from the transmission of energy increased by 20 percent up to EUR 83.4 million. This amounted to 30.4 percent of total income. The increase in revenue was greatly affected by the higher actual average price of energy transmission services. Revenue from system services in 2020 rose 18.4 percent up to EUR 86.7 million. The revenue from electricity transmission and related services amounted to EUR 206.9 million and made 75.5 percent of the total income of EPSO-G group.
In 2020, the EPSO-G group received EUR 50.5 million in revenue from the natural gas transmission and related services. This amounted to 18.4 percent of the total income of EPSO-G group. Although from the beginning of 2020, the tariff of the transferred gas was lower by 16 percent due to the increased volume of transferred gas to the direction of Latvia and greater gas demand in Lithuania, the revenue from the natural gas transmission and related services were only 5 percent lower than in 2019.
In 2020, the operating costs of the group amounted to EUR 229.9 million. Compared to 2019, the costs were EUR 5.3 million lower. The biggest part of the operating costs stemmed from the purchase of energy resources and related services.
Operating earnings before interest, taxes, depreciation, and amortization (EBITDA) of EPSO-G group amounted to EUR 78 million in 2020. EBITDA increased by 64 percent compared to the same period.
The EBITDA margin rose to 28.5 percent from 18.9 percent in the same period a year ago. The return on equity exceeded the target of the Government of the Republic of Lithuania and reached 20 percent.
Assessment of governance
With a strong focus on transparency and accountability, in 2020 the EPSO-G group was awarded for the most advanced management of its subsidiaries. The quality of management has received rating “A”. This was shown by the “SOE Good Corporate Governance 2019/20” published by Governance Coordination Centre. The Good Governance Index published by the Centre is the most widely used tool for assessing the quality of management of all SOEs. The index consists of three main dimensions of evaluation: transparency, collegial bodies, and strategic planning and implementation.