VILNIUS, Lithuania — To save money during the harsh Baltic winter, Romanas Ziabkinas did something unremarkable: He turned off his central heating and installed a cheaper electric heater.
Now, however, he finds himself neck-deep in legal woes.
His utility company refused to recognize the switch and is suing him for about $10,000 in unpaid utility bills for his apartment in Lithuania’s capital. “Splitting from the Soviet Union was easier than leaving this heating system,” he said.
Ziabkinas’ plight is extreme, but his frustrations over heating costs are shared by a majority of Lithuanians, who have seen prices soar over the past several years, especially since the shuttering of its only nuclear power plant in 2009, which forced the country to import more Russian gas to keep warm. Lithuania’s decision to scrap atomic power over safety concerns has put it under a new kind of threat: intimidation from Russia, which critics say shows no hesitation to use its energy dominance to bully former vassal states.
While natural gas prices have tended to fall globallyin recent years because of deposits of shale gas, Lithuanian households have watched the retail cost of natural gas pumped from Siberia spike 450 percent.
Lithuania, a country of 3 million people, currently pays Russia a wholesale price of about $540 per 1,308 cubic yards of natural gas piped from Siberia, roughly 15 percent more than Baltic neighbors Latvia and Estonia pay and 25 percent more than Germany.
Many Lithuanians feel Russia is punishing them for unresolved political issues, just as the Kremlin has usednatural gas supplies to goad Ukraine and Belarus over political and economic disputes.
Lithuania has demanded compensation from Moscow for alleged damages incurred during the Soviet occupation from 1945 to 1991, and last year enacted a European Union directive to separate gas supply and distribution, a direct blow to Russia’s commercial interests in the country. Estonia and Latvia, which also receive all their gas from Russia, have done neither - and, not surprisingly, enjoy cheaper prices.
Gazprom, Russia’s stateowned gas monopoly, rarely comments on natural gas price deals with individual countries, using the secrecy to haggle with each nation separately - playing one off the other - in what is seen as an extension of Kremlin foreign policy.
Lithuania’s long-term supply agreement with Gazprom expires in 2015. Russia has justified the price increases by saying the deal allows it to index gas rates to oil prices. The catch is that Russia has given discounts to friendly nations, while sticking to the full price for those with which it has disputes.
“We believe Lithuania should pay a fifth less than it does now,” Prime Minister Algirdas Butkevicius recently told reporters.
Lithuania’s previous center-right government sued Gazprom in international arbitration court for $1.9 billion over natural gas price increases and has called on the EU to investigate the company’s alleged unfair pricing policies. Butkevicius, however, is willing to scrap the litigation in exchange for cheaper gas.
Regardless of the legal outcome, heating now seems a luxury many Lithuanians can’t afford - and with tragic consequences. Last winter, a 77-year-old pensioner in the southern district of Alytus froze to death in his house. In 2011, an 80-year-old woman who lived alone died in her bed, the frozen bed sheets stuck to her body.
Many people who can’t afford their heating bill don’t pay it, creating an increasingly large deficit that utilities fear they’ll never recover.In Vilnius, the total amount of unpaid heating bills surpassed $15 million last year, while in Kaunas, Lithuania’s second largest city, $17 million in charges weren’t paid.
Lithuanians also pay more for heating because their dwellings, built during the Soviet era, aren’t well insulated. In the decade after World War II, about 80 percent of Lithuania’s population moved from villages to cities, where they were placed in Soviet apartment blocks that were built hastily and without regard for efficient insulation.
“To the Soviets, it was easier to build new towns and concrete multi-story houses with thin walls and then heat them without counting energy costs,” said Vytautas Stasiunas, head of the Lithuanian District Heating Association. “Gas and oil was free those days, but now it’s simply outrageous.”
Nearly all of Lithuania’s leaders have vowed to invest hundreds of millions of dollars in energy-saving housing renovations - promises that have gone unfulfilled.
“There are dozens of awful mistakes made in the energy sector by each and every cabinet since independence. These mistakes are affecting everybody in this country,” Stasiunas said.
Lithuanians - who have one of the lowest personal income levels in the 27-member EU - aren’t waiting around and are searching for alternatives.
Vytas Ratkevicius, who lives in Uzupis, a neighborhood in downtown Vilnius, recently switched off his central heating. “We decided to install wood-burning equipment after the sharp increase in gas prices. It’s obvious that gas prices will continue to go up, and we’re simply not ready to pay for this,” he said.
Ratkevicius purchases his wood from Nerijus Pienelis, who says that demand is growing every year. “It used to be remaining farms and villages where people used my production,” he said. “Now most of the wood goes to the national capital, where even rich people burn it.”
Business, Pages 19 on 02/05/2013