Companies eye Visaginas contracts

  • 2012-05-02
  • From wire reports

RIGA - A 20 percent stake in the new Visaginas nuclear plant, which the media have mentioned previously, would be sufficient for the Latvian power utility Latvenergo, said company CEO Aris Zigurs, reports Estonia could get a 22 percent share in the project, Lithuania 38 percent and Hitachi, the strategic investor, 20 percent. The talks on distribution of the Visaginas nuclear plant shares are continuing, but Latvenergo will be fully satisfied with a 20 percent stake, said Zigurs.

According to the current plans, the parties’ investments in the construction of the nuclear plant will be in proportion to their stakes in the power plant. Zigurs confirmed that Latvenergo was expected to contribute 1 billion euros.
This amount will have to be invested during the construction of the power plant - by 2020 or 2021. Latvenergo has received several financing proposals from the Japanese Export Credit Agency and U.S. export credit authorities, but Zigurs said these proposals would be considered and compared with borrowing from banks when the agreement is to be signed.

The money that Latvenergo will invest in the project will not be money from the state budget - these will be Latvenergo’s own funds and borrowed money, which will be invested in the new power plant and then gradually recovered after the nuclear plant comes into operation, said Zigurs. The Economy Ministry’s State Secretary Juris Puce said on April 26 that it was hard to say currently if the project would be profitable for Latvenergo. If the project is not economically viable, the company will withdraw from the project.

According to Puce, many matters are still being tackled regarding the project: division of responsibilities among the participants in the project, obligations provided in international agreements on nuclear security, and others.
Puce also said that the new nuclear plant would not change electricity prices for consumers. The greatest effect on the price for electricity comes from the increasing consumption in Sweden, as well as from the development of electric power capacities of Sweden and Norway, as Latvia’s integration into the region continues. The price will be determined by the large producers, and Latvia is not one of them, said Puce. The new nuclear power plant is currently expected to start producing electricity in 2021.

Power plant means jobs
If the total cost of construction of the Visaginas nuclear plant is about EUR 5 billion, the three Baltic countries’ power utilities could carry out approximately 30 percent of the project, worth about 1.5 billion euros, Visagino Atomine Elektrine Director General Rimantas Vaitkus said on April 26 at a conference on Latvian companies’ opportunities to participate in the Hitachi procurement procedures and the Visaginas nuclear plant project.
According to Vaitkus, the Baltic, including Latvian, companies could participate in various stages of the project, but mostly in the construction stage. The other areas where the Baltic companies may look forward to procurement include transport and logistics.

The project could create 6,000 new jobs altogether.
The Visaginas nuclear plant project will be a great stimulus for the region’s development, said Vaitkus.
The development of the project will continue until 2015, construction and tests of the plant are planned for 2015-2020. The new nuclear plant will be producing electricity for a period of 60 years, said Vaitkus.
Since the previous Ignalina nuclear plant shutdown, Lithuania imports more than 70 percent of electricity from third countries, mostly Russia, and the Baltic countries together - around 30 percent. Electricity imports are projected to drop to 18 percent in 2020.

Latvian Economy Minister Daniels Pavluts urged businesses participating in the conference to acquaint themselves with opportunities offered by Hitachi. The nuclear plant is a major project, and Latvian business can gain very much from it, mastering new technologies or offering their services as suppliers.