Lithuania adopts law on new nuclear power plant

VILNIUS, June 28 Thu Jun 28, 2007 7:43am EDT

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VILNIUS, June 28 (Reuters) - Lithuania's parliament adopted a law on Thursday on building a new nuclear power plant, the formal start of a project that is expected to involve Baltic neighbours Estonia and Latvia as well as Poland.

The 3,000-3,500 megawatt plant, to replace the ageing Soviet-era Ignalina nuclear reactor, which has to be shut down under a deal with the European Union, is expected to be built by 2015.

One goal is to strengthen the region's energy independence from Russia.

"Lithuania has made a strategic step, which will enhance our energy independence and strengthen our cooperation with partners in the region," Prime Minister Gediminas Kirkilas told parliament after the vote.

Lithuania plans to invest 7.5 billion to 8 billion litas, while the total cost of the project may reach 22 billion litas ($8.57 billion).

Energy companies from the Baltic states and Poland are expected to form a joint company to build the plant.

Under the law, Lithuania aims to have at least a 34 percent stake, with the partners expected to share the remaining stakes equally.

Latvia's AS Latvenergo, Estonian Eesti Energia and Poland's Polskie Sieci Elektroenergetyczne SA have said they were interested in taking part in the project.

The prime ministers of the Baltic states and Poland are expected to seal the deal on July 6 in Vilnius.

POWER LINKS

Poland was invited in as part of a package deal after Warsaw agreed to build a link between the power grids of both countries. A link between Lithuania and Sweden is also planned.

Sweden's Vattenfall VTTG.DE said on Thursday it would be also interested in investing in the new nuclear power plant, but it was too early to discuss concrete plans.

"We have to see the new law, and we must know who the main shareholders will be and how each of them will contribute," Vattenfall Chairman Dag Klackenberg told journalists after meeting Kirkilas.

Deputy Economy Minister Vytautas Nauduzas told Reuters Vattenfall was seen as a potential bidder to build a link between Lithuania and Sweden on the bed of the Baltic Sea.

Firms including French state-owned nuclear group Areva CEPi.PA and U.S. General Electric (GE.N) have stated their interest in supplying the reactors to the new plant.

A tender to supply the reactors could be announced at the earliest in late 2008 or early 2009.

To gain investments for the new plant, Lithuania plans to found a "national investor" by merging several state and privately-owned energy companies into a single group.

The new nuclear plant will be built near Ignalina, in eastern Lithuania, which uses Soviet-built reactors of the same type that caused the Chernobyl nuclear disaster.

It is to be closed in 2009, after which Lithuania will have to import electricity from Russia or use Russian gas to produce electricity at its fossil-fuelled power plants.

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