Nuclear plant partners face hurdles

Wednesday, January 23, 2008

By Stefan Wagstyl in Vilnius, Robert Anderson in Stockholm and Jan Cienski in Warsaw

The Baltic states and Poland are struggling to settle the political, commercial and environmental problems involved in their joint plan for a €7bn nuclear power station, aimed at easing expected regional electricity shortages and reducing dependence on Russian energy.

The 3,200-megawatt plant would be built at an ageing Soviet-era nuclear power station at Ignalina, Lithuania, which is due to close in 2009 in line with European Union requirements.

The partners are planning for the new plant to start operating in 2015, but industry executives say the deadline is tight. Lithuanian officials, who - with Ignalina's looming closure - have the strongest interest in pressing ahead quickly, say they expect the scheme to be agreed no later than this autumn.

"This is a regional project, serving not just Lithuania, but it will contribute to the development of this entire European sector," President Valdas Adamkus of Lithuania told the Financial Times.

Maris Riekstins, Latvian foreign minister, said: "The project is going forward in accordance with the plans of the companies involved. We are on schedule."

However, Einari Kisel, director of energy at the Estonian economy ministry, said yesterday: "The project will be delayed - 2015 is unrealistic. There are a lot of questions that have to be settled internally in Lithuania. These negotiations [between countries] won't be easy either."

A senior Polish official said: "The political will to go ahead is there, but our economics ministry still has some questions."

The project is expected to pass a key hurdle in the next week when the Lithuanian parliament considers plans for establishing a public-private national champion as its participant in the project.

Under the proposals, the new holding company would own Lietuvos Energija, the national grid, as well as RST and VST, the country's distribution companies. Vilniaus Prekyba, a private Lithuanian group, would give up its dominant stake in VST in return for 38.8 per cent in the holding company.

But the authorities also want to buy a 20 per cent stake in RST held by Germany's Eon - and have yet to negotiate with Eon.

Also, Lithuania has yet to finalise ownership details with the other three countries. Originally, the project involved the three Baltic states building a modest 1,600MW plant, with each country owning a third.

But in 2006, Vilnius invited Poland to join the project and complicated matters last year by passing a law under which Lithuania would own a 34 per cent stake, leaving 22 per cent each for the other three partners. With Poland joining, the project has been doubled to 3,200MW to accommodate Polish demands for at least 1,200MW of capacity. The increase necessitated new environmental studies, scheduled to be completed by the summer.

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