Governance
Operational documents
EPSO-G, in carrying out its activities, aims to act correctly and comply with the requirements of state laws and international standards. All Group activities are regulated by operational policies. A complete list of publicly announced policies is provided below.
National security
The Ministry of Energy pays special attention to the resilience of critical infrastructure. The expectation is set for strengthening the protection of physical and cyber infrastructure. Considering the military and hybrid threats in our region, it is planned to implement drone detection systems, physical barriers, strengthen cybersecurity, and ensure the availability of human and material reserves.
The role of “EPSO-G” in ensuring national security is also emphasized – the Group is already participating in the implementation of the Lithuanian and German artillery factory project in Baisogala. It is expected that the Group will demonstrate leadership and expand its activities and expertise in the defense industry by investing in security and defense industry projects that are significant for the state and align with national interests.
International connections and networks
One of the key projects is the implementation of the “Harmony Link” electricity connection with Poland. It is also aimed at strengthening the intersystem electricity connections between Lithuania and Latvia and making a decision regarding the implementation of the marine connection with Germany, the “Baltic Hub”, and the conditions for project execution.
The expectation is raised to increase international gas flows from the Klaipeda liquefied natural gas terminal towards Central Europe and Ukraine. It is also planned to ensure measures for the development of the pure hydrogen network in the Nordic and Baltic countries and the implementation of hydrogen development.
These projects are important not only for achieving greater integration with the European Union (EU) electricity and gas markets but also for strengthening system reliability and creating conditions for the development of renewable energy resources (RES), green transformation, and increasing the country’s competitiveness.
Energy green transformation and system flexibility
It is planned that by 2028, electricity generation capacities based on RES in Lithuania will reach at least 8 GW, therefore the “EPSO-G” group must strive for leadership in integrating RES generation capacities and managing energy flows. The Group will actively seek to ensure optimal development of transmission infrastructure, sector integration, and flexibility of the electricity energy system. Dynamic transmission tariffs will also be evaluated, and the geological structure of Syderiai will be analyzed to assess long-term energy storage possibilities.
The Ministry of Energy expects that “EPSO-G” will actively contribute to the development of green gas infrastructure, utilizing existing natural gas infrastructure for biogas development and creating a new green hydrogen ecosystem. It is also expected that the Group will conduct studies to assess the possibilities of hydrogen, synthetic green gas, and CO₂ transportation, provide proposals, and make decisions that create the highest added value for Lithuania.
Financial expectations
The Group’s adjusted average return on equity must not be less than the indicator set by the Government. The return on investment must be no less than the average return on investment of mature economies in Western Europe, allowing not only to maintain the technical condition of the managed infrastructure but also to create opportunities for system development and the attractiveness of energy transformation investments.
The Group must maintain an investment credit rating of no lower than Baa2 according to Moody’s or equivalent levels used by other credit rating agencies. The ratio of the Group’s net debt to adjusted EBITDA must not exceed 6 times in the medium term and 5 times in the long term.
The Group must maintain a consistent implementation of its dividend policy, and the level of dividends paid by the Group must not be less than that set by the Government. “EPSO-G” must strive for the maximum level of dividends in subsidiaries and associated companies and prioritize the use of financial flows for funding strategic investments or projects.
Principles of Group operations and sustainability
The Group must conduct its activities according to the highest standards of transparency, governance, ethics, and social responsibility. The company’s activities must be based on good governance practices as provided by the laws of the Republic of Lithuania, international recommendations (OECD), and other best global practices.
The Group must adhere to a sustainable development and good corporate governance policy in its operations. The company must consistently implement its commitment to achieve a net zero GHG emissions balance by 2050 and contribute to the implementation of the United Nations sustainable development goals.
The Group must transparently provide support and humanitarian aid, primarily focused on cooperation with scientific and educational institutions to promote energy professions and provide humanitarian assistance for the restoration of Ukraine’s destroyed energy infrastructure.
Policies, guidelines and codes
The operational policies of the “EPSO-G” group are documents designed to consistently and effectively implement the organization’s management system. This system helps employees transparently and efficiently achieve the goals set in the operational strategy, creating value for the country’s people and businesses. To ensure their effectiveness, the companies of the “EPSO-G” group prepare an annual report on the progress of implementing operational policies for the management company’s board.
13.Policy on the essential conditions of transactions
The goal of the policy on essential terms of transactions:
- to establish standardized essential transaction terms approved by the Group’s Board and/or Meeting when the Company’s articles of association or legal acts require corporate decisions for the conclusion of a specific transaction;
- to establish uniform rules and principles for Transaction identification within the Group, ensuring that the Board and/or Meeting is approached in a timely manner regarding the conclusion of the relevant Transaction, providing all necessary information for the decision-making;
- to ensure clarity and consistency of decisions made by the Group’s Companies’ Board and/or Meeting regarding the conclusion of transactions.
14.Accounting policy
The strategic goal of the EPSO-G group of companies is to ensure a continuous energy supply while operating efficiently and to create opportunities for market participants to freely exchange it. To achieve these goals, the group’s companies maintain an open, fair, and constructive dialogue with stakeholders and regularly provide financial and non-financial activity reports.
To ensure that stakeholders can assess the performance and prospects of the group’s companies and make relevant economic decisions, financial statements are prepared in accordance with the EPSO-G accounting policy, which establishes uniform principles, methods, and requirements for managing the accounting of the companies that make up the group and for preparing and presenting financial statements.
The main provisions of the EPSO-G accounting policy:
- information must be objective, comparable, and useful to internal and external stakeholders;
- information is reliable, relevant, timely, and understandable;
- accounting is managed based on the laws of the Republic of Lithuania on Accounting, the laws on Financial Reporting of Companies, and the laws on Consolidated Financial Reporting of Groups of Companies, as well as other regulatory acts governing accounting procedures;
- accounting is maintained and financial statements are prepared and presented in accordance with the applicable International Financial Reporting Standards and interpretations approved by the International Financial Reporting Interpretations Committee, adopted for application in the European Union. Detailed information about the accounting principles of the EPSO-G group of companies is provided in the published financial statements.
15.Dividend policy
The EPSO-G dividend policy regulates the procedure for determining the amount of dividends, their payment, and announcement for all companies forming the group.
Its main goal is to establish clear guidelines for expected ownership and investment returns for current and potential shareholders, while ensuring sustainable long-term growth in corporate value, timely implementation of strategically important projects for the country, thereby consistently strengthening trust in the entire group of energy transmission and exchange companies.
The EPSO-G dividend policy directly links the amount of dividends payable to the efficiency of the company’s equity utilization – the greater the benefit the company creates for the shareholder, the larger portion of profit it can allocate for further development or the implementation of other important projects.
The policy was updated on February 7, 2020. The changes are related to corporate governance structure changes, namely the abolition of the supervisory board, as well as taking into account changes in the legislation regulating dividend payments.
Download:
16.Treasury and financial risk management policy
The companies of the “EPSO-G” group aim to effectively manage their financial resources, ensure sustainable financial condition, and maintain an appropriate balance between the interests of different stakeholders – creditors, suppliers, contractors, and others. The treasury and financial risk management policy establishes the key principles based on which the risks of financing, liquidity, counterparty, currency, and interest rate changes are managed.
The aim of the policy is to establish unified treasury and financial risk management principles for the Group’s companies, in order to reduce the likelihood of risks related to this area and their potential impact, and to ensure the conditions for effective management of financial resources.
17.Technological assets
The goal of the EPSO-G technology asset management policy is to establish the main principles of technology asset management, the implementation of which creates the conditions for generating the greatest added value in pursuit of the Group’s strategic objectives.
18.Transport policy
The EPSO-G transport policy establishes uniform guidelines for the use of vehicles in group companies, based on the principles of transparency, efficiency, and cost savings.
This policy regulates:
- the grounds and principles for the allocation of vehicles for work purposes. A vehicle is allocated to perform necessary work functions or, if provided for, in the employment contract approved by the board;
- the class of vehicles and the method of acquisition. Non-premium class vehicles for work are purchased through operational leasing applying “green” procurement principles and ensuring fair competition among suppliers;
- the control measures for vehicle usage. Assets designated for work cannot be confused with personal ones or used for personal gain;
- the responsibility of vehicle users. It is mandatory to comply with traffic rules, respect other road users, ensure careful operation, and report violations committed with the vehicle designated for work to law enforcement authorities.
Download: