Latvia hesitates on energy link project

  • 2009-12-09
  • From wire reports

RIGA - Latvian state-owned electric utility Latvenergo says it is planning to invest around 60 million euros in the project Nordbalt that will connect the electricity markets of the Baltic and Nordic countries, reports news agency LETA. This investment would facilitate the creation of a new entity that would implement the power interconnection project - a submarine cable linking Sweden and Lithuania – that will also strengthen the energy market in Latvia.
The Latvian government has not, as of Nov. 30, made a final decision on the issue, and has not revealed to the public details of the project, saying only that this is “classified information,” when questioned on reasons for the delay. Economy Minister Artis Kampars (New Era) confirms that “everything is in order,” admitting however that he’s only referring to the technical details, reports delfi.lv.

In the new venture, Latvenergo will be an equal partner together with the energy companies of Lithuania and Sweden, where each party will own one third of the new venture’s capital.
The power interconnection cable, also called the ‘energy bridge to Sweden,’ is an important project in that it will be one more connection between the electricity grids of the Baltic states and other European Union countries, and will ensure the better functioning of a free energy market in the region. This would also lessen the Baltic states’ energy dependence on Russia, to which the Baltic states are tied through the existing aging Soviet-era power grid.

The decision on the exact amount of investment Latvenergo would make is yet to be decided. Under the condition that implementation of the project gets underway by 2010, the European Union has pledged to allocate around 175 million euros. Latvia is supposed to receive one third of this, which Latvenergo will then use to further develop the energy grid in the Kurzeme region (western Latvia).

The heads of government of Latvia and Lithuania, together with Sweden agreed on the construction of the power link in April, and signed a memorandum on the project in July. The project is estimated to cost between 516 and 738 million euros.
Lithuanian Energy Minister Arvydas Sekmokas said he foresees that the project will consist of two parts: first, construction of the electricity link and second, the strengthening of Latvia’s domestic electricity network.
The underwater cable will be approximately 350 kilometers long and is planned to be completed by spring 2016.