Viewing cable 04VILNIUS1505

04VILNIUS15052004-12-09 14:33:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Vilnius
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 VILNIUS 001505 
E.O. 12958: DECL: 12/08/2014 
     ¶B. VILNIUS 1439 
Classified By: Economic Officer Miguel Kamat for reasons 1.4 (B) and (D 
¶1. (C) A GOL resolution on November 24 confirmed that one of 
two Chernobyl-type Ignalina Nuclear Power Plant (INPP) 
reactors will close as expected on December 31.  The 
resolution follows GOL-EU consultations in Brussels at which 
EU experts advised Lithuania to honor its EU accession 
commitments.  Next month, the Lithuanian parliament will 
debate a French company's feasibility study on a new NPP. 
Canadian and U.S. companies have also expressed interest in 
constructing a new reactor.  End Summary. 
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GOL Affirms December 31 Closure Date for Unit I 
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¶2. (C) A GOL resolution on November 24 confirmed that the 
older of the two INPP units will close on December 31.  (The 
second unit is slated for decommissioning in 2009.)  The 
announcement reflected President Valdas Adamkus's decision to 
abide by Lithuania's EU accession treaty obligations and to 
not seek a six-month extension on operations.  The President 
declined the advice of GOL energy experts, who had expressed 
concerns (Ref A) that Lithuania would face a power supply 
shortfall in the event that the remaining unit proved unable 
to meet the winter's increased energy demands.  The decision 
also ran counter to statements President Adamkus himself made 
to the Ambassador that he would seek an extension.  Following 
consultations in Brussels, Ministry of Economy Undersecretary 
Arturas Dainius told us that the EU had indicated it would 
likely not support a GOL request for an extension. 
With Closure, Scant Possibility of Blackout 
¶3. (C) Presidential Energy Advisor Nijole Zambaite told us 
that a blackout could "theoretically" occur following the 
closure of Unit I, but that Lithuania could always turn to 
non-nuclear alternatives (Ref B).  Lietuvos Energija General 
Director Rymantas Juozaitis told us that following the 
closure, Kaliningrad would need to draw its power from Russia 
across the highly integrated regional grid passing through 
Lithuania, since it could no longer depend on surplus 
electricity exports from Lithuania.  This grid must pass 
through a narrow bottleneck consisting of three lines between 
Smolensk (Russia) and Belarus.  This could conceivably raise 
the possibility of a blackout affecting much of Lithuania. 
However, for a blackout to occur in Lithuania, in Juozaitis's 
opinion, the following unlikely scenario would have to 
- Failure of INPP's remaining unit; 
- Failure of generators at Lithuania's Elektrenai Thermal 
Power Plant (INPP's back-up) to engage; 
- Extreme icing on at least one of the electrical lines in 
the Russia-Belarus bottleneck; and 
- Excessive consumer demand (as might happen, for example, 
when temperatures fall below zero degrees Fahrenheit). 
Decommissioning Requires Additional Funding 
¶4. (U) INPP Director General Viktor Sevaldin told us that 
Unit I will remain in operational condition, loaded with 
nuclear fuel, for three years following the December 31 
closure date.  The GOL will only commence the process of 
removing fuel from the reactor in 2008, when its new storage 
facility for spent fuel rods will be ready.  Only after the 
fuel is removed from the unit and safely stored in a new 
facility for processing radioactive waste, experts tell us, 
can the reactor be dismantled.  Given the logistics involved, 
said Sevaldin, it is unlikely that dismantling will begin 
before 2013.  Lithuania has received EU commitments of 80-90 
million euros (USD 106-120 million) for the spent fuel 
facility, and 79 million euros (USD 105.1 million) for the 
waste processing facility.  For the decommissioning process 
to proceed according to plan, however, the GOL, according to 
Sevaldin, will need an additional infusion of 80 million 
euros (USD 106.4 million) for the spent fuel facility and 51 
million euros (USD 67.8 million) for the radioactive waste 
processing facility.  Sevaldin said the GOL would present its 
funding needs to donor countries and the European Commission 
at a conference in London on December 10. 
¶5. (U) Sevaldin noted that INPP's need for LTL 50 million 
(USD 66.5 million) annually to maintain the remaining 
reactor, pay employee salaries, and purchase spare parts 
could pose an additional obstacle to decommissioning.  The 
GOL is able to contribute only LTL 18 million (USD 23.9 
million) to this sum, and hopes to obtain EU support for the 
balance.  Although the EU is scheduled to sign an agreement 
with the GOL by December 20 to cover 2005 expenses, Brussels 
has made no additional funding commitments. 
New NPP 
¶6. (U) Sevaldin said the GOL has not decided whether to 
construct a new NPP.  The Lithuanian parliament will consider 
a report in January by the French company Framatom and the 
Kaunas Technological University on the feasibility of 
constructing a new reactor.  Sevaldin noted that Adamkus has 
repeatedly told him that he supports a new NPP for economic 
and environmental reasons.  The French, said Sevaldin, are 
organizing an investors' meeting on the issue on January 13. 
He also claimed that the Canadian company AECL and U.S.-based 
Westinghouse have expressed interest in competing for any 
possible NPP tender (Westinghouse has not contacted the 
Embassy on this matter).  The GOL, which is able to 
contribute only 30 percent of the estimated cost of 2 billion 
euros (USD 2.7 billion), will need private contributions to 
cover the balance. 
Workforce Lay-offs 
¶7. (U) Sevaldin said INPP management will lay off 200 workers 
during both 2005 and 2006.  Ignalina Nuclear Power Plant 
Regional Development Agency Director Arnoldas Abramavicius 
told us his agency is drafting a regional development 
strategy to help INPP workers find gainful alternative 
employment.  His agency has created 100 new jobs in 
industries such as construction, sawmills, and tourism. 
Abramavicius said each INPP worker would receive LTL 30,000 
(USD 11,539) on separation, and if eligible, retirement 
benefits as well.  Although reductions before 2009 will be 
relatively minor, Abramavicius predicted that the GOL will 
need to lay off an additional 2,000 workers when it closes 
Unit II in 2009.  His agency's strategy is to help members of 
the INPP workforce transfer their skills to industries such 
as metal construction, chemicals, sewing and furniture 
building, and to attract investment to the region's tourism 
¶8. (C) The GOL had limited room to maneuver on the reactor 
closure date.  Absent flexibility from Brussels, it felt 
compelled to honor Lithuania's international commitments.  By 
taking the high road and closing the reactor, however, both 
President Adamkus and Prime Minister Brazauskas may well get 
a "black eye" if a blackout occurs this winter, as the public 
will likely blame both of them for any significant power 
¶9. (SBU) We note that, as the decommissioning date 
approaches, there is growing momentum within the GOL and the 
local scientific community to support a new NPP.  If these 
plans progress, and Westinghouse really is interested, we 
will work with the company and the GOL to ensure that the 
construction contract bidding process related to a new NPP is 
fair and transparent.