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EBRD loan will improve telecommunications in Lithuania
Lithuania's national telecommunications operator will be able to provide direct lines to 14,000 new subscribers and eliminate network congestion as a result of a loan from the European Bank for Reconstruction and Development (EBRD). The US$ 25 million (ECU 22 million equivalent) loan to Lietuvos Telekomas (Lithuanian Telecommunications), signed today in Vilnius, will help Lithuania modernise and promote its telecommunications infrastructure and support the restructuring of Telekomas.
Ron Freeman, First Vice President of the EBRD, said: "This project is aimed at improving, in particular, the congested local networks in Vilnius, Kaunas and Klaipeda. This will promote a balanced regional development and boost Lithuania's transition to a market economy. The project will also make Telekomas more profitable by introducing local call metering and will enable the company to restructure along commercial lines".
Although Lithuania has a high telephone penetration rate of 22.4 per 100 inhabitants for the region, it is still low compared with Western countries. There is a long waiting list for telephone lines, and considerable congestion exists at the local exchange level, because the installed switching equipment is old and there are currently no tariffs for local calls. The project is designed to make the network more efficient by focusing minimal investment on clearly identified bottlenecks, thereby reducing congestion and maximising the use of existing assets.
The funds from the loan will be used to finance: the installation of a new international gateway in Vilnius; high-quality digital exchange lines for use by the business community in three major towns; installation of local call meters to enable Telekomas to charge subscribers for local calls; implementation of a new computerised subscriber billing and accounting system; and an institutional development programme consisting of technical assistance and training in accounting and finance, marketing, and human resources development.
The total project cost is ECU 42.87 million. In addition to the EBRD loan, a further ECU 9 million equivalent (US$ 10 million) may be available from the Export Import Bank of Japan. Local costs of ECU 11.87 million equivalent will be provided by Telekomas. The project implementation period will be approximately three years.
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