Agreement expected on moving nuclear project forward

  • 2009-10-07
  • From wire reports
VILNIUS - Lithuania says it expects to sign a key investment deal within the first six months of 2010, which would create a four-nation group to construct a replacement for the Soviet-era Ignalina nuclear plant, which is required to shut down by the end of this year, reports news agency AFP. This timetable represents a "a provisional date, because talks are still under way with our regional partners, Latvia, Estonia and Poland, and the negotiations with the strategic investor will depend on those talks," said Lithuania's Energy Minister Arvydas Sekmokas.

The 'strategic investor' hasn't yet been named, though it will occupy the lead role in the project.
Lithuania currently maintains the nuclear power station, near Ignalina in the east of the country, one which is similar to the plant that exploded at Chernobyl in Ukraine in 1986, the worst-ever nuclear power accident. Vilnius pledged to close the plant by Dec. 31, 2009 as part of the terms of its admission to the European Union in 2004.

The original target date for opening a new plant was 2015, but authorities later warned of a delay until 2018. Some experts have said 2020 is more likely, but project director Sarunas Vasiliauskas said others saw 2018 as "not unrealistic, just ambitious."
Disagreements have plagued talks between the four countries involved. Poland argues that with a population of 38 million compared to the combined seven million of its three Baltic partners, it deserves a big slice of the electricity output. One of Ignalina's reactors was shut in December 2004 and Lithuania is worried about a looming power shortfall, because the plant provides the bulk of its electricity.

Construction costs for the new 3,200-megawatt plant are expected to be at least 3 - 5 billion euros, according to a study released by investment bank N. M. Rothschild & Sons. The report says that the power plant project was "attractive from a commercial point of view, and achievable."

Vasiliauskas says that an outside partner is needed to successfully complete a project this size. "The prepared business model and sponsorship plan indicate that…Lithuania and our regional partners alone will not be able to finance such a project. Regional partners also lack the knowledge to develop [it]. One of the conclusions is that a strategic investor, with experience and knowledge to carry out such projects, is necessary," said Vasiliauskas. According to him, a strategic investor could be a large energy company which could use their assets to guarantee loans. To find a strategic investor, a public contest will be held. Whether large and smaller syndicates join in the tender will depend on who can guarantee the necessary loans, he adds. Vasiliauskas indicated that seven companies could be in the running for the contract to build the plant: Swedish energy group Vattenfall, Germany's RWE and E.ON, France's Suez-GDF and EDF, Italy's Enel and Spain's Iberdola.

As Energy Minister Arvydas Sekmokas stated in the press conference Sept. 30, a strategic investor might expect a 50-60 percent share of the new nuclear power plant; the rest would be split among Lithuania, Latvia, Estonia and Poland.
The Lithuanian nuclear project is one of several talked about in the region. Poland plans to build its first plant by 2020, Russia has launched a drive to construct one by 2016 in its Baltic enclave of Kaliningrad, and Belarus is also planning one by 2016.

The moves have sparked protests by environmentalists. In Lithuania, campaigners filed a lawsuit seeking to have the construction permit withdrawn.