Lithuania says Gazprom may cut supplies

[Reuters]

VILNIUS, Jan 29 (Reuter) - Lithuania's state-owned gas
company Lithuania Gas on Wednesday said Russian gas giant
Gazprom <GAZP.RTS> has threatened to halve its supplies in
February if progress was not made on a $41 million debt.
``Gazprom sent a telegram on Monday to Prime Minister
Vagnorius saying it would cut our gas supply by 50 percent on
February 1 if measures were not taken to begin paying our $41
million debt,'' a Lithuania Gas spokesman told Reuters.
He said Gazprom was due to supply Lithuania with 70 million
cubic meters of gas in February.
He added that an intermediary company Stella Vitae was due
to send Lithuania 234 million cubic meters of gas in February.
Lithuania Gas owes Gazprom $28.5 million directly and $12.5
million to Stella Vitae, which it in turn owes to Gazprom.
This cycle of debt is common in Lithuania's inefficient and
debt-ridden energy sector. Consumers often fail to pay producers
who in turn are unable to pay suppliers.
The current government has promised to privatise big chunks
of the sector in an effort to make it more efficient and more
responsive to market conditions.