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Publikuoti: 2/9/2014. Atnaujinta: 8/3/2021

Rate of return on investments (WACC)


The WACC is calculated by taking into consideration the weighted price of using the equity capital and the debt capital, without taking into account the effect of taxation (i.e. the WACC value is higher than that with the taxation effect taken into consideration and represents the pre-tax cost of the capital), by using the following formula:

To calculate the rate of return on investments, the data provided in Table 1 were used, which are applied in setting the ceilings of the natural gas prices to the natural gas  and centralized supply of liquefied petroleum gas undertakings in 2022-2026.

Table 1. Data  used to calculate the rate of return on investments

RatioValue    Source/link
Cap of cost of debt (interest rate), percent, Rd2,532The average interest rate  during the most recent twelve-month period of long-term loans given to non-financial corporations, as announced by the Bank of Lithuania.
Premium on cost of debt Half of difference between the cap of cost of capital and actual cost of capital of individual company.
Return on equity, percent, Re

- for natural gas undertakings, engaging in transmission, liquefaction, storage;

- for setting tariffs for biogas plants, which supplies gas to natural gas system

5,430
- for undertakings, engaging in natural gas distribution and in centralized supply of liquefied petroleum gas5,349
Share of debt capital (optimal capital structure),  D0,5
Share of equity  capital (optimal capital structure), E0,5
Tax rate, m0,15The income tax rate applied in Lithuania.
Risk-free rate of return on investments (in percent), Rf1,420The arithmetic mean of the average weighted profitability of the auctions of the Government bonds  denominated in Litas (till December 31,2014) and Euros (from January 1, 2015) with the maturity period of no less than 3468 days), held during the recent ten-year period.
Equity risk premium (in percent), Rerp5,000
Beta coefficient (levered β)

- for natural gas undertakings, engaging in transmission, liquefaction, storage;

- for setting tariffs for biogas plants, which supplies gas to natural gas system

0,802On the basis of the Report on the investment conditions in the EU member states published by the Council of European Energy Regulators (CEER), the arithmetic mean of the risk ratio in the natural gas transmission sector of the European Union member states
- for undertakings, engaging in natural gas distribution and in centralized supply of liquefied petroleum gas0,786On the basis of the Report on the investment conditions in the EU member states published by the Council of European Energy Regulators (CEER), the arithmetic mean of the risk ratio in the natural gas distribution  sector of the European Union member states
Actual weighted average cost of debt capital in natural gas sector, proc.1,7
Actual weighted average cost of debt capital in natural gas sector without loans from international financial institutions, which are listed on page of Ministry of Finance of the Republic of Lithuania (https://finmin.lrv.lt/lt/es-ir-tarptautinis-bendradarbiavimas/tarptautines-finansu-institucijos), proc.2,040 

 

 WACC of 2022:
AB „Amber Grid"3,94
AB „Energijos skirstymo operatorius"3,98
AB agrofirma „Josvainiai"3,61
UAB „Fortum Heat Lietuva"
3,72
UAB „Intergas"3,70
UAB „SG dujos"3,70
AB „Klaipėdos nafta"4,14