Vilnius Combined Heat and Power Plant (Vilnius CHP) and the former main contractor of the biomass unit, Polish company Rafako, have concluded a settlement agreement in the legal dispute before the SCC Arbitration Institute concerning the termination of the contract, Rafako's failure to complete the project, and indemnification. Under the agreement, Rafako has committed to partially compensate the damages and hand over key project documentation.

Vilnius CHP CEO Mantas Burokas notes that the settlement will allow the company to successfully complete the project and increases the chances of Rafako's former subcontractors recovering their dues. Given Rafako's difficult financial situation, continued arbitration could have led to the contractor's bankruptcy and left Vilnius CHP without any compensation, while Rafako's continued restructuring gives Lithuanian subcontractors a better chance of recovering what they are owed. Lawyers estimated that continued litigation could have taken five years or more and cost up to EUR 10 million, making a settlement the most rational solution.

Under the settlement, Vilnius CHP will receive nearly EUR 30 million in compensation — around EUR 15 million has already been paid, with the remaining EUR 15 million to be paid by Rafako in instalments over five years. Vilnius CHP will also recover all equipment and documentation held by Rafako, worth an additional roughly EUR 2 million, which is important for continuing and completing the biomass project. The settlement was still pending approval from the SCC Arbitration Institute.

Last August, the SCC Arbitration Institute had ruled that Rafako was at fault for the delayed construction of the biomass unit and that Vilnius CHP had valid grounds to terminate the contract and claim penalties and indemnification.

Vilnius CHP's waste-to-energy unit has been generating heat and electricity since 2021, processing around 160,000 tonnes of municipal waste annually, while the biomass unit will use about 500,000 tonnes of biomass per year. Once complete, Vilnius CHP will be one of the most technologically advanced combined heat and power plants in Europe, with an estimated total electric capacity of 93 MW and heating capacity of 239 MW.