On 19 August 2020 an article was published by 15min.lt which deals with the PSO electricity tax relief approved by the Government of the Republic of Lithuania and the entities that have benefited from this incentive. The author of the article, journalist Birutė Davidonytė, published data on the funds returned by the state to business – more than 13 million EUR – and emphasized that 5.9 million of this amount was paid to AB ORLEN Lietuva.
AB ORLEN Lietuva is a Lithuanian company registered and operating in Lithuania. The Company is the largest taxpayer in the country, one of the largest employers and exporters in Lithuania. Its activities are important both for the country's economy and for ensuring the energy security of the entire region.
Between 2011 and the end of July this year, the Company paid more than 104 million EUR in PSO tax. According to the 2019 report published by the PSO funds administrator UAB Baltpool, AB ORLEN Lietuva is the largest consumer of electricity in the country, consuming almost as much electricity (45%) as all other consumers and producers connected to the transmission network. Respectively, AB ORLEN Lietuva is also the largest PSO tax payer in the country. Therefore, it is logical that out of the 27 companies that have been refunded part of the PSO fee by the fund administrator UAB Baltpool the share reimbursed to AB ORLEN Lietuva is the largest.
Under the applicable PSO tax recovery scheme, energy-intensive industries can recover part of the PSO price of renewable energy sources paid for the previous calendar year provided that they are not indebted to the budget for PSO. The 15min.lt article states that during nine years (since 2011) AB ORLEN Lietuva had accumulated a 13.1 million EUR debt. We would like to note that AB ORLEN Lietuva paid the major part of the PSO fee for the entire indicated period and withheld only the PSO payments of the so-called producer – for the electricity produced and consumed by the Company itself. Therefore, the so-called debt, accounted for a small part of the amount paid.
PSO arrears of the Company have resulted in defense of its rights and interests after the PSO fee changes introduced in the manner which manifestly breaches the EU legislation by significantly extending the scope of PSO. Failure to comply with the legislative requirements in regulating the PSO was the exact reason for AB ORLEN Lietuva and other Lithuanian entities to defend their rights and legitimate interests and by initiating legal proceedings at the EU and national institutions, the Company was seeking to ensure that collection of huge amounts for the PSO was fair and reasonable.
Currently AB ORLEN Lietuva has paid all invoices issued by the PSO administrator UAB Baltpool as well as the incurred debt. The company meets all criteria defined in Law on Electricity of the Republic of Lithuania and Procedure for Administration of Funds Raised from Public Service Obligations in the Electricity Sector which makes it eligible for the recovery of part of the PSO price paid. For this reason ORLEN Lietuva submitted an application for the refund of the part of PSO price paid for last calendar year.
Also, the article published by 15min.lt reminds about the investigation conducted by this news portal last year, which stated that 'the Government had made a number of decisions beneficial to Polish oil concern ORLEN Lietuva', due to which the concern supposedly received millions in discounts and benefits. We deny this unsubstantiated information provided by the journalist which undermines AB ORLEN Lietuva reputation and which is intended to mislead the public by forming the assumption that the applicable PSO tax relief is exceptionally beneficial for Public Company ORLEN Lithuania.
The country's companies, which consume a lot of electricity and sell most of their products on the international markets, are particularly exposed to different competitive conditions compared to competitors from third countries. For this reason, both AB ORLEN Lietuva and other Lithuanian electricity-intensive companies have repeatedly suggested that Lithuania take advantage of the measure proposed by the European Commission to increase the competitiveness of the companies – an incentive for companies in electricity-intensive industries by exempting them from PSO-like charges intended to finance the production of electricity from renewable energy sources. The essence of this measure and its coherence with the EU policy is discussed in great detail in the explanatory note of the draft Law of the Republic of Lithuania on Energy No XIII-1456.
The PSO tax relief scheme was approved by the Seimas of the Republic of Lithuania after unanimous adoption of the Law Amending the Law on Electricity No XIII-1456, the Government of the Republic of Lithuania detailed the mechanism, and the European Commission agreed on the scheme. In the European Union, similar differentiated PSO schemes are applied to industry by most countries, including Poland, Latvia, Romania, Slovenia, the Czech Republic, Bulgaria and Germany. This is one of the key measures that increases the competitiveness of the existing industries and at the same time makes it possible to attract as many large industrial investors as possible.
The support for the development of electricity production from renewable sources depends only on the state policy, and the PSO relief scheme allows recovering the PSO funds allocated for this purpose. 75% of the recovered PSO amount must be invested in energy efficiency measures provided for in the energy audit findings. Therefore, it is obvious that this PSO recovery scheme on equal terms is relevant to all electricity-intensive Lithuanian companies, not only AB ORLEN Lietuva. It will encourage companies to invest in energy saving, development and competitiveness.