The Government of the Republic of Lithuania set a 5.7 percent return on equity (ROE) target to the fully state-owned energy transmission and exchange holding EPSO-G for the period 2019–2021. The set targeted ROE level is lower comapred with 8.8 percent return for the previous period of three years.
According to Mr. Algirdas Juozaponis, Financial Director of EPSO-G, such a decision was mainly influenced by the regulatory principles applied by the National Commission for Energy Control and Prices (NCECP) in order to determine prices for consumers based on future expenditure and return on investments and to create condition for bigger competitiveness of the domestic economy.
“The activities on transmission of gas and electricity carried out by the group’s companies “Amber Grid” and “Litgrid” that generate the biggest income are regulated by the State, so the group’s financial result and relative ratios are mostly determined by the regulatory principles of NCECP, e.g., average weighted price of equity of “Amber Grid” was reduced from 7,09 to 3,3 percent starting this year”, – said Mr. A. Juozaponis.
Besides, the ratio set is affected by the financial liability of EPSO-G to pay the debt of 210 million euros to another state-owned company “Lietuvos energija” for the shares of subsidairy company “Litgrid”. Therefore, the biggest amount of the profit earned by EPSO-G group is directed to repay this debt and not to pay dividends to the budget. This financial obligation was equal 170 million euros as at the end of 2018.
With regard to the necessity to allocate enough funds to implement this financial obligation, the Government passed a decision that EPSO-G has to pay 0,5 percent dividends in the value of allocated dividends directly to the State budget until 2022.