Lithuania is proceeding with privatisation of state Lithuanian property, including large infrastructure items. A total of 3,128 items have been sold for LTL 4,245,000,000 during the second round of privatisation, launched in August 1996. Another 3,000 entities are slated for sale. The biggest transactions included Lietuvos Telekomas, Maюeikiш Nafta, KLASCO, Lietuvos Draudimas, LISCO and the last state-owned commercial banks. In April 2001 the Lithuanian Savings Banks, the second-largest commercial bank and the biggest retail bank, was merged with Hansabankas. In March 2002 the German Norddeutsche Landesbank Girozentrale acquired a 76% stake in the last state-owned bank, Lietuvos Юemлs Ыkio Bankas.

The largest entities now scheduled for privatisation are the power utility Lithuanian Energy, the Lithuanian Gas, the Lithuanian Airlines and the Lithuanian Railway. Four companies separated from the Lithuanian Energy in late 2001 - the Eastern and Western Distribution Networks and Maюeikiai and Elektrлnai electrical power plants - supplemented the privatisation list. In May 2002 a 34%-stake in the Lithuanian Gas was sold to a strategic Western investor, the German Ruhrgas and E.ON Energie.

The 1997 Law on Privatisation defines several methods of privatisation, including public auction, public tender, direct negotiations, public sale of shares, rent-to-own and transfer of state control. Foreign and local investors have equal rights. A method of privatisation is selected depending on the size and branch of an enterprise, the portion of stock slated for sale and other criteria. Strategic items, e.g. Maюeikiш Nafta and state-owned commercial banks, were privatised according to special laws. The state has a right to retain a "golden" share granting extra non-property rights if more than half of public stock in transportation, energy, oil, communications and public utility enterprises is sold. Privatisation on the stock exchange has been rather scant.

Special requirements pertaining to buyers' qualifications, future investments and job preservation are applied when large state enterprises are privatised. Discretionary powers of privatisation authorities in selecting privatisation methods and setting privatisation requirements have reduced the transparency and efficiency of privatisation. Sales through direct negotiations have led the Lithuanian government to assume significant obligations. For example, the buyer of the Lithuanian Telecom pledged to preserve about 10,000 jobs and to invest USD 225,000,000 in return for monopoly rights in terrestrial communications. Lithuanian authorities pledged to extend to the buyer of Maюeikiш Nafta a loan worth USD 300,000,000 and loan guarantees worth USD 71,000,000, in addition to concessions for the use of infrastructure.

The privatisation fund is separated from the state budget. By law no less than two thirds of revenues from privatisation must be used to compensate savings lost to rouble depreciation before 1992. The remaining proceeds go towards financing privatisation outlays, business aid programmes and other government expenditures.