Viewing cable 09VILNIUS581
Title: LITHUANIA SEEKS INCREASED OUTSIDE FINANCING FOR A

IdentifierCreatedReleasedClassificationOrigin
09VILNIUS5812009-11-03 15:08:00 2011-08-30 01:44:00 CONFIDENTIAL Embassy Vilnius
R 031508Z NOV 09
FM AMEMBASSY VILNIUS
TO SECSTATE WASHDC 3852
INFO AMEMBASSY RIGA
AMEMBASSY TALLINN
AMEMBASSY WARSAW
DEPT OF ENERGY WASHINGTON DC
DEPT OF COMMERCE WASHINGTON DC
C O N F I D E N T I A L VILNIUS 000581 
 
 
PLEASE PASS TO USTDA:JMERRIMAN 
DOC:JDERSTINE 
DOE:MAPICELLI 
 
E.O. 12958: DECL: 10/30/2019 
TAGS: ENRG ECON LH
SUBJECT: LITHUANIA SEEKS INCREASED OUTSIDE FINANCING FOR A 
NEW NUCLEAR PLANT 
 
REF: VILNIUS 275 
 
Classified By: A/DCM John Finkbeiner for reasons 1.4 (b) and (d). 
 
SUMMARY 
------- 
 
¶1.  (C) On 29 October the General Director of Visagino 
Atomine Elektrine (VAE), Sarunas Vasiliauskas, told us that 
the GOL is proceeding with plans for the Visaginas Nuclear 
Power Plant (VNPP) but needs 95 percent of the financing to 
come from outside sources.  VAE is likely to build a one 
reactor plant with a capacity of between 600 and 1700 MW at a 
cost of 3 to 5 billion euros (about 4.4 billion - 7.4 billion 
USD).  Vasiliauskas insisted that senior level support exists 
for this project in all three Baltic nations and that a 
strategic investor will likely be selected around the New 
Year (but would not formally sign an agreement until 
mid-summer 2010).  The strategic investor will select 
technology for the plant, but would have to pay to upgrade 
the electrical grid to accept any reactor larger than 1300 
MW. 
 
SENIOR LEVEL SUPPORT 
-------------------- 
 
¶2.  (C) Vasiliauskas said that on the 27th of April the PMs 
of Estonia, Latvia, and Lithuania affirmed their support to 
continue cooperation on the Visaginas NPP during their 
meeting regarding an electrical link to Sweden.  He added 
that he expected a similar declaration on the 6th of November 
when the PMs of the Baltic Republics meet again. 
Vasiliauskas insisted that President Grybauskaite supports a 
diversified energy mix that includes a NPP. 
 
LOOKING FOR LOTS OF POCKETS 
--------------------------- 
 
¶3.  (C) Vasiliauskas indicated that the GOL would consider 
giving a strategic investor a 50-70 percent interest in the 
plant.  He noted that both President Grybauskaite and PM 
Andrius Kubilius fully support having a strategic investor in 
the VNPP project and would back removing the stipulation in 
Lithuanian legislation that requires that the GOL hold a 34 
percent interest in the Visaginas project.  In addition, he 
said the GOL would make an effort to change legislation so 
that a 60 year concession could be awarded to a strategic 
investor in the new NPP.  He divulged that other investors or 
consortia of investors could be combined with the investment 
of a strategic investor to make up the 95 percent of project 
cost that the GOL will not fund (Vasiliauskas suggested these 
other investors could include Latvenergo, Eesti Energia and 
PGE).  According to Vasiliauskas the GOL will provide for 5 
percent of the cost of the project through the offer of the 
construction site and preexisting connections to the 
electrical grid that exist at the immediately adjacent 
Ignalina Nuclear Power Plant (INPP).  He suggested that if 
sufficient non-GOL funding was not found by the end of 2010 
the VNPP project would likely cease to exist. 
 
STRATEGIC INVESTOR IN THE GRID 
------------------------------ 
 
¶4.  (C) Vasiliauskas said that he expects a strategic 
investor to be selected around the New Year but to not have a 
formal agreement in place until mid-summer 2010.  This is a 
few months later than the March 2010 time frame stipulated in 
the GOL's Directive 300 (reftel), but is still quite 
ambitious according to Vasiliauskas.  The GOL will look for 
two criteria in the selection of a strategic investor: 
financial wherewithal and nuclear expertise. 
 
¶5.  (C) The GOL will not select the technology for the plant 
but cede this decision to the strategic investor, which would 
presumably take a Build, Own, Operate (BOO) interest in the 
new NPP, according to Vasiliauskas.  He and other 
interlocutors have repeatedly made the point that the 
strategic investor will make the decision on reactor 
technology, although he added that he assumed regional 
partners would have some say in the selection of reactor 
technology. 
 
¶6.  (C) EDF, RWE, and EON all were mentioned by Vasiliauskas 
as potential strategic investors.  He made clear that a 
strategic investor's technology selection is going to be 
governed by the fact that the grid cannot presently accept an 
 
 
individual reactor that exceeds 1300 MW in size.  The current 
Westinghouse and GE proposals would fit the bill 
(Westinghouse's AP1000, at 1100 MW is the clear favorite, 
according to Vasiliauskas and other GOL interlocutors). 
Vasiliauskas said Areva's EPR (at 1600 MW) might still be in 
the running despite its large size, but the plant operator 
(strategic investor and sub-investors) would be asked to pay 
for grid upgrades if it were to choose a plant that was 
larger than the 1300 MW limit.  This may reassure 
Westinghouse, whose preference is that technology be chosen 
before a strategic investor.  Vasiliauskas was clear in his 
rejection of "Russian or German-branded Russian" as a reactor 
selection. 
 
SMALLER SIZE AND COST 
--------------------- 
 
¶7.  (C) Vasiliauskas affirmed that the GOL is considering a 
one reactor plant, and we have heard the same from the 
Minister of Energy.  Vasiliauskas said this plant could be 
between 600 and 1700 MW in size, and cost about 3-5 billion 
euros (about 4.4 billion - 7.4 billion USD).  This is a 
smaller reactor than the site could accept; we have heard in 
the past that two reactor blocks that do not exceed 3400 MW 
could be installed there.  In addition, a smaller NPP would 
not allow Lithuania to provide the 1000-1200 MW that Poland 
has requested from the project.  Vasiliauskas responded that 
if the Poles want more power out of the plant they will need 
to pay for it.  Also, he said they might still participate in 
the project to have the chance to get some NPP experience 
before embarking on their own nuclear plant projects.  As for 
the plant being enough to replace but not increase the loss 
of power caused by the upcoming closure of the INPP, 
Vasiliauskas responded that Lithuania is building Visaginas 
to move away from dependence on Russia, adding that "at least 
we won't have blackouts." 
 
COMMENT 
------- 
 
¶8.  (C) The GOL's decision to have 95% of the project 
financing in private hands is understandable given 
Lithuania's current economic recession, which is having a 
drastic effect on current government expenditures. 
Nevertheless, it may prove difficult for the GOL to find 
parties willing to fund 95 percent of the project cost.  In 
any case the GOL is moving ahead with the project, including 
sending representatives on a USTDA-sponsored orientation 
visit to the U.S. the week of November 9. 
 
DERSE