“The state-owned enterprise reform has already brought tangible results – the transparency of state-owned enterprises is increasing, companies pay higher dividends, their operational efficiency is increasing. The attitude towards the state-owned enterprise reform is also changing: support is strengthening for the idea that state-owned enterprises should follow good business principles and not be just a policy tool. We therefore hope that future governments will continue to follow the globally accepted good corporate governance practices.” – said Rimantas Žylius, Minister of Economy, while presenting the third annual report of the current Government on state-owned enterprises.

Based on this reform, as of January 2012, the 50% of state-owned enterprise yearly profits will go to the company’s owner – the State. Hopes that this income will help cover the social security expenses are high: according to the Ministry of Economy, in 2011 over 400 million LTL and it is expected that a record of over 500 million LTL from state-owned enterprise profits will fill the State
budget in 2012. Up to June 12th, state-owned enterprises have already transferred 213 million LTL in dividends and profit taxes to the State budget.

149 State-owned enterprises are divided into four categories: transportation, energy, forestry and other. The largest in sale revenues in 2011 was the energy sector with 12 companies, generating 44.1% of the total portfolio income. The transportation sector includes 24 companies that generate 37.4% of total turnover. 42 forest enterprises and the State Forest Institute generate 8.4% in sales revenues. 70 other companies account for about 10% of the portfolio turnover.

AB “Lietuvos geležinkeliai” (Lithuanian Railways) in the transportation sector surprised with the best results in 2011: due to increased revenues, profits rose from 69 million to 150 million LTL. Meanwhile the post office “Lietuvos paštas” (Lithuanian Post) experienced a profit of 0.7 million LTL after 4 consecutive years of losses. AB “Klaipėdos nafta” (Klaipeda Oil) profits increased 1.7 times – up to 45 million LTL. Yet “VAE grupė” losses increased from 39 to 109 million LTL. They say it is due to AB “Lietuvos energija” (Lithuanian Energy), who increased the losses by 63 million LTL because their pollution permit costs increased.

While the Minister of Economy is happy to see such a positive tendency of the state-owned enterprise performance, other economists are weary stating that only a handful of companies are profitable. Yet all agree: there is still a long road of reorganizing state-owned enterprises and changing their views on good business practices.