Government invites investors to consider building new nuclear plant

  • 2006-01-04
  • By Milda Seputyte
VILNIUS - Faced with the imminent loss of its nuclear power plant in Ignalina, Lithuania has launched a new project aimed at building a modern nuclear power plant. The Economy Ministry will kick off the ambitious project by sending 25 invitations to potential investors, many of which are internationally renowned corporations operating in the energy field.
A study commissioned by the ministry shows that the potential investors could include the world's best producers of nuclear reactor, European energy companies and several large electricity producers.

Some of the short-listed names by the Ministry of Economy are Lithuanian energy companies Lietuvos Energija and VST, but there are also some of the world's largest machine building plants, including Russia's Atomenergo-eksport, the French-German Framatome ANP, Canada's AECL, American General Electric and British BNFL.

Potential investors will be asked for proposals on how the project would be implemented, what would be the investor's role and what will be required from the Lithuanian government.

The companies will be asked to return answers within two months.

The proposed nuclear plant would have a capacity of 700-1,600 megawatts and would provide electricity not only for Baltic states but also consumers in Germany and Scandinavia.

It is expected that such a nuclear power plant could emerge within 8-10 years.

The project reportedly has the approval of the International Atomic Energy Agency.

It is anticipated that the final decision regarding the new nuclear power perspective will be made in June, after the investment proposals have been studied.

Still, it will be up to European leaders to decide whether the project, which will run into the hundreds of billions, will be strictly commercial or will enjoy the support of one or more governments.

Several governments have expressed interest in the project, particularly Poland and Estonia, and to a lesser degree Latvia. Parliamentary Chairman Arturas Paulauskas discussed the project during his recent visit to Tallinn.

"An interest has been expressed. When a study on the project is lined out, will be able to talk in more specific tone as to how much, when and where. But today [President Arnold Ruutel] expressed a wish, and that's something," Paulauskas was quoted as saying.

"Our talks didn't touch the subject of financing, but obviously, their involvement in the construction could also be financial support," he said.

In December Prime Minister Algirdas Brazauskas also met the chief executives of Eesti Energia during his visit to Estonia. On several occasions representatives of Eesti Energia have expressed their interest to have their stake, if only Lithuania resolves to launch the construction.

Summarizing ongoing talks with Lithuania's neighbors, Economy Ministry Secretary Arturas Danius said that this is still only "primary coordination of positions," and more active discussions are to follow. "Everybody agrees that it's needed to sit down and to talk," Dainius said.

So far Lithuania has been leaning toward the idea of a commercial nuclear project; nonetheless the possibility of state involvement is also in the air. But this idea has been criticized from several quarters, including Europe's energy commissioner, Andris Piebalgs, and even closer to home, the Lithuania Free Market Institute. The latter has pointed out the risks of state involvement in such a costly project and the burden it poses on taxpayers.

According to the institute, the market should be the determining factor when deciding on future construction; the government's primary concern should be ensuring a fair, open investment environment.

The perspective of the government's participation in company's operation might put off potential investors fearing the regulation of electricity market, the Free Market Institute concluded.

A survey conducted by Eurobarometer showed that 60 percent of the Lithuanian population approves the production of nuclear energy. Only 27 percent oppose it, compared to the EU average of 55 percent.

The only two other countries more positive than Lithuania in terms of nuclear power plants are Hungary and Sweden, with 65 percent and 64 percent support respectively.

At present Lithuania runs one Soviet-era nuclear reactor in Ignalina. The other was shut down on Dec. 31, 2004, in accordance with Lithuania's pre-accession agreement with the European Union.

The early closure was largely predestined by a combination of history and Western pressure, as the Soviet-style reactors, each with a capacity of 1,300 megawatts, are considered unsafe, particularly in light of the 1986 Chernobyl accident.

But the nation's leadership continues to lobby foreign governments for support in building a new reactor.