The Lithuanian government will provide up to 54 million euros in state aid to Orlen Lietuva, part of Poland’s energy group Orlen, to help with its 1-billion-eur upgrade to the Mažeikiai-based refinery, Economy Minister Lukas Savickas says.
“We are not talking about an annual amount [of support], it is a specific commitment, enshrined in the letter of intent, which stipulates that this is a general state incentive of a little more than 8 percent of the project’s value. No more than 54 million euros,” Savickas told reporters on Wednesday.
Earlier in the day, Savickas, alongside the ministers of energy, finance, and environment, as well as Orlen Lietuva CEO Zbigniew Paszkowicz, signed a letter of intent on state aid for the company. The aid will take the form of corporate tax relief, compensation for indirect costs of emission permits, and investment in infrastructure.
Savickas hopes that the agreement will be a sufficient basis for the company to “expect the fastest possible timeframes” to complete the project. However, according to Savickas, Orlen Lietuva did not commit to a specific deadline for completing the upgrades.
“I think that the agreement gives us every reason to expect that the company will definitely move forward as quickly as possible from today,” Savickas said.
Delays caused by pandemic, war in Ukraine
The Orlen Lietuva CEO confirmed the company’s plans to complete the upgrades next year, despite “turbulent times” in the region, adding that the project’s completion had to be postponed due to a “complete change” in the market situation and disruptions in supply chains.
“The initial plan was to finish this project this year, but we had to take the turbulent times and our environment into consideration. We are working (...) to understand the situation and to adjust the parameters of the project to see this project justified reasonably, despite the different environment,” Paszkowicz told reporters.
In his words, the company’s long-term investments in the plant upgrades amount to around 1 billion euros and the cost has gone up due to the Covid pandemic, inflation and the war in Ukraine.
Also on Wednesday, the Lithuanian government designated the Mažeikiai plant upgrade as a project of strategic importance, and state aid for it will amount to 8.5 percent of the initial cost of 640 million euros.
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