Viewing cable 09VILNIUS275
Title: AMBITIOUS TIMELINE BY GOL FOR LITHUANIA'S NEW

IdentifierCreatedReleasedClassificationOrigin
09VILNIUS2752009-05-18 11:10:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Vilnius
R 181110Z MAY 09
FM AMEMBASSY VILNIUS
TO SECSTATE WASHDC 3505
INFO EUROPEAN POLITICAL COLLECTIVE
DEPT OF COMMERCE WASHINGTON DC
DEPT OF ENERGY WASHINGTON DC
C O N F I D E N T I A L VILNIUS 000275 
 
 
DOC FOR ITA: JDERSTINE AND PNUGENT 
DOE: MAPICELLI 
 
E.O. 12958: DECL: 05/18/2019 
TAGS: ENRG ECON LH
SUBJECT: AMBITIOUS TIMELINE BY GOL FOR LITHUANIA'S NEW 
NUCLEAR PLANT 
 
REF: A. BRUSSELS 311 
     ¶B. VILNIUS 143 
 
Classified By: Ambassador John A. Cloud for reasons 1.4 (b) and (d). 
 
SUMMARY 
------- 
 
¶1. (C) On April 22 the GOL issued a decree that includes the 
ambitious goal of choosing reactor technology for the new 
Visaginas nuclear power plant by the end of June 2010. 
Although the General Director of the firm charged with 
completing this work, Visagino Atomine Elektrine (VAE), 
expressed some misgivings regarding the feasibility of this 
timeline, the Minister of Energy as well as VAE's parent 
company, LEO LT, said they will meet this deadline.  In a 
non-public tender that appears to be legal, LEO and the GOL 
are proceeding with selecting a consultant for the project. 
How to finance the plant has yet to be decided.  Nonetheless, 
GE and Westinghouse are being considered as reactor vendors 
by the GOL.  We will continue to do our utmost to make sure 
the playing field is level for U.S. firms vying for this 
multi-billion dollar contract.  End Summary. 
 
RAMPING UP? 
----------- 
 
¶2.  (U) An April 22 government decree includes a timeline for 
key decisions in the project to build a replacement for the 
Ignalina Nuclear Power Plant (INPP).  The decree's steps, 
listed below, in some cases have overlapping time lines.  At 
this point, only LEO LT is considered a participating 
company. 
 
Step 1 - Select a consultant to determine a business and 
financing model 
Date:  May 2009 
Responsibility:  Energy Ministry and participating companies 
 
Step 2 - Develop a business model and project financing plan 
Date:  July - September 2009 
Responsibility:  Energy Ministry and participating companies 
 
Step 3 - Develop a GOL negotiating position for the project, 
including responsibility in the event of an accident, 
disposal of waste, reserve capacity, etc. 
Date:  August - September 2009 
Responsibility:  Energy Ministry, MFA, and participating 
companies 
 
Step 4 - Decisions on project implementation:  end of 
environmental assessment phase, site planning, develop GOL 
position on share of foreign capital in the project, etc. 
Date:  September - November 2009 
Responsibility:  Energy Ministry, Environment Ministry, and 
participating companies 
 
Step 5 - Select a strategic investor and start negotiations 
with strategic partners 
Date:  October 2009 through end of March 2010 
Responsibility:  Energy Ministry and participating companies 
 
Step 6 - Preparation and approval of GOL action plan for 
project implementation including bilateral & international 
agreements, obligatory reports, assessment of legal basis of 
project and preparation of any necessary legislation 
Date:  May 2009 - January 2010 
Responsibility:  Energy Ministry, MFA, and Ministry of Justice 
 
Step 7 - Preparation of documentation for technology purchase 
and initiation of technology purchase process 
Date:  January - June 2010 
Responsibility:  Energy Ministry and participating companies 
 
¶3.  (C) With embassy support and participation, GE and 
Westinghouse representatives met with GOL and LEO officials 
on April 21 and 22 in Vilnius.  Marius Grinevicius, the 
General Director of VAE, the LEO daughter firm charged with 
planning and building Visaginas, told us the timeline in the 
GOL decree would be difficult to achieve.  But when 
Westinghouse questioned the Minister of Energy, Arvydas 
Sekmokas, about the timeline for technology bids, he 
confirmed that he would push for 2010 with construction of 
the first reactor by 2018.  Sekmokas added that he would 
allow slippage to 2019 or 2020, but not any longer.  Sarunas 
Vasiliauskas, a member of the new LEO board and Strategic 
Projects Director, echoed Sekmokas when he said that LEO is 
still targeting 2018.  Westinghouse told interlocutors that 
if the GOL would want a Westinghouse reactor to be ready for 
operation in 2018, it would need a commitment by the end of 
¶2010. 
 
¶4.  (C) In its meeting with LEO, GE emphasized that potential 
strategic investors, i.e., large Western utilities, are 
likely to perceive that the three Baltic countries and Poland 
are still disputing who will get what share of the power from 
the Visaginas plant.  This may cause them to shy away from 
bidding on the project.  GE encouraged LEO officials to 
separate the political goal of energy independence from the 
business model of building a nuclear power plant.  The 
argument appeared to resonate. 
 
QUICK AND HOPEFULLY FAIR 
------------------------ 
 
¶5.  (C) Sarunas Vasiliauskas told us May 5 that the selection 
of a consultant, the first step in the decree timeline, was 
proceeding without a public call for bids.  Vasiliauskas said 
this was possible because the GOL's April 22 directive 
creates an extreme urgency that LEO cannot control, i.e., the 
requirement to choose a consulting firm by the end of May 
¶2009.  According to Lithuanian procurement law, which 
theoretically is compliant with EU law, an extreme urgency 
that cannot be attributed to the contracting authority (LEO), 
allows a contract to be awarded without prior publication of 
a contract notice.  Vasiliauskas declined to provide a list 
of the companies being considered as consultants but promised 
that they have "deep expertise in the nuclear area" and that 
more than one U.S. firm has been invited to bid on the 
contract. 
 
U.S. FIRMS' CHANCES 
------------------- 
 
¶6.  (C) Sekmokas bluntly told the Westinghouse 
representatives at the beginning of their meeting that he 
favored their technology.  Vasiliauskas also told them that 
he was advocating for their technology.  In his meeting with 
GE, Sekmokas asked just a few questions.  GE had received 
high marks from the previous Lithuanian Government for their 
ability to construct a plant on a timely basis.  This 
requirement will remain key for the GOL.  Nonetheless, both 
GE and Westinghouse maintain regular contact with VAE both 
via the Embassy and otherwise. 
 
¶7.  (C) Grinevicius said a decision will be made in July by 
LEO regarding the maximum size of an individual reactor that 
the Lithuanian electrical grid can accept.  He expects this 
will be 1300 MW.  The maximum capacity of the plant according 
to the Environmental Impact Assessment (EIA) is 3200 MW - 
3400 MW depending on whether cooling towers are constructed. 
(Note:  GE and Westinghouse do not see these limits as being 
of concern, as the reactors they are offering produce 
approximately 1300 and 1000 MW, respectively.) 
 
COMMENT 
------- 
 
¶8.  (C) The current government, in office since December, has 
expressed its frustration with the slow pace of this project 
under the previous government.  Although its determination to 
step things up is admirable, it will have a hard time meeting 
its own deadlines.  In addition to not having a plan yet for 
financing the plant, the timeline practically ignores the 
critical, but thorny, negotiations to come with partners 
Estonia, Latvia, and Poland.  We will continue to closely 
monitor the process and advocate for transparency. 
 
CLOUD