Poland freezes role in Lithuania atomic project

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Poland has decided to freeze its participation in a four-country project to build a new nuclear power plant in neighbouring Lithuania, state energy group PGE said Friday.

"Taking into consideration the current conditions, which at this stage have appeared to be unacceptable for PGE, and also the PGE Group's other key projects, we have decided to suspend our participation in the project before assuming any formal obligations," the group's chief Tomasz Zadroga said in a statement.

PGE also said it was not in talks with Russian company Inter Rao on importing power from Russia's Kaliningrad territory, tucked between Poland and Lithuania. Russia plans to build an atomic plant there by 2016.

PGE is steering Poland's own atomic power programme, and is poised to launch tenders for the coal-reliant country's first nuclear plant, which it aims to bring online by 2020.

Lithuania moved swiftly to play down PGE's move.

"The withdrawal of one partner is not critical for us. We're continuing our work with our regional partners and the strategic investor," Energy Minister Arvydas Sekmokas told reporters there.

The plant project also involves Lithuania's neighbouring Baltic states Latvia and Estonia.

In July, Lithuania invited Japanese-US conglomerate Hitachi GE to start talks on building a new plant. The other bidder was US-based Westinghouse Electric, owned by Japan's Toshiba Corporation.

Lithuania closed its only nuclear power plant, a Soviet-era facility at Ignalina near Visaginas in the Baltic state's northeast, on December 31, 2009, under the terms of its European Union entry five years earlier.

Lithuania had tried and failed to convince Brussels to let it keep the plant open until the replacement at a nearby site was ready.

The new facility is meant to be online by 2020, generating 1,300 megawatts.

"Our strategic goals have not changed," Lithuanian Prime Minister Andrius Kubilius told reporters Friday.

The cost of the project is estimated at up to 5.0 billion euros ($6.7 billion).

"The project has a very strong economic and competitive basis," Kubilius added.

The atomic plant plan has been dogged by discord among the four countries about their relative stakes in the project and future share of the power generated.

With 38 million people, Poland dwarfs the Baltic trio, whose combined population is just 6.5 million.

In addition, last December, the bidding process had to start afresh after South Korea's state energy firm Korea Electric Power Corp., which had been chosen for talks, unexpectedly pulled out.

July's decision to tap Hitachi GE for talks was seen as having breathed new life into the project.

Sekmokas said he could not rule out that PGE's move was a negotiating tactic.

"We are moving to a fast speed. Maybe that speed wasn't really acceptable for our Polish partners," Sekmokas said.

The old plant provided 70 percent of the electricity in Lithuania, which has had to boost its use of gas-fired power stations as a result of the closure.

Lithuania still relies on Russia for all its gas.

Its ties with its Soviet-era master have been rocky since independence in 1991, and this year it has been locking horns with Russian gas giant Gazprom over pricing.

© 2011 AFP

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